ADNOC Buys Millions of Barrels of Discounted Iraqi Crude Amid Gulf Disruption
ADNOC's Strategic Moves in the Gulf Oil Market
By Nidhi Verma and Ahmed Rasheed
Expansion of ADNOC's Trading Activities
NEW DELHI/BAGHDAD, Sept 15 (Reuters) - Abu Dhabi National Oil Co (ADNOC) has bought millions of barrels of discounted crude from Iraq's state oil firm, three people familiar with the matter said, expanding its role as a trader amid supply disruptions from the Iran war.
The state company, through its trading arm, was the biggest lifter of Iraqi crude in August and September, two Iraqi energy sources said, helping boost Iraqi exports that had been severely curtailed in the earlier months of the war.
Volume and Pricing Details
ADNOC agreed to buy 32 million Iraqi barrels in August at discounts ranging from $24.90 to $27 a barrel, and a further 40 million barrels in September, including 10 million barrels at an $18-a-barrel discount and 30 million barrels at a $25 discount, one of the Iraqi sources said.
The second Iraqi source said that while Iraq's state oil marketing organisation SOMO had allocated ADNOC 32 million barrels in August, the UAE giant lifted 20 million barrels due to export constraints and Basra Oil Company's inability to secure sufficient crude.
ADNOC has lifted 14 million Iraqi barrels so far in September, the person said.
A third source said ADNOC had bought about 20 million barrels of crude from Iraq's state-owned SOMO in tenders at a discount of between $25 and $27 a barrel for September through October lifting.
Other Market Participants
Other companies are also buying Iraqi crude. SOMO offered August-loading cargoes at steep discounts, drawing in other buyers including Chinese state majors PetroChina and Zhenhua Oil, TotalEnergies, Vitol, Trafigura, Mercuria and Cathay Petroleum, trade sources told Reuters earlier.
Geopolitical and Logistical Context
Iran’s Role and Strait of Hormuz Access
Last month, Iran granted permission for a number of tankers carrying Iraqi oil to pass through the Strait of Hormuz following repeated requests from Baghdad through various channels, Iran’s state news agency IRNA reported.
Iraq's exports had been severely curtailed in the earlier months of the war due in part to its location at the top of the Gulf and the lack of its own shipping fleet.
ADNOC's Adaptation to War-time Conditions
State-owned ADNOC has become more nimble since the war started, using an expanding tanker fleet as well as a pipeline to the port of Fujairah to move oil out of the Gulf and across the Strait of Hormuz.
Diplomatic Developments
PUT THE PAST BEHIND THEM
Despite attacks on some ADNOC tankers, Iranian President Masoud Pezeshkian on Sunday met with UAE Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan on the sidelines of the BRICS summit in New Delhi, saying the two sides had agreed to put the past behind them.
Export Data and Future Plans
Recent Export Figures
Iraq has been exporting about 2 million barrels of oil per day this month according to Kpler data, down from 2.354 million bpd in August but above the 1.374 million bpd in July.
UAE crude exports have risen to 3.236 million bpd this month, up from 2.886 million bpd in August and 2.871 million bpd in July, according to Kpler.
ADNOC's Refining and Sales Strategy
ADNOC plans to process most of the crude purchased from other Gulf producers at its Ruwais refinery and sell more of its own crude into the international market, one of the three sources said.
Reporting Credits
(Reporting by Nidhi Verma in New Delhi and Ahmed Rasheed in Baghdad. Additional reporting by Siyi Liu in Singapore. Editing by Alex Lawler, Jan Harvey and Mark Potter)
