State Oil Marketing Organization (SOMO) has reportedly offered a record discount on Basra crude exports as Iraq seeks to maintain oil shipments amid heightened risks in the Strait of Hormuz.

Sharp Discount on Basra Crude

According to Reuters, SOMO introduced an unprecedented price reduction for May 2026 cargoes, offering a discount of around $33.40 per barrel on Basra Medium crude to attract buyers willing to continue lifting Iraqi oil shipments.

Strait of Hormuz Risk Factor

The pricing move is aimed at ensuring continued exports from Iraq’s southern oil terminals as shipping risks and insurance costs rise sharply because of regional tensions.

The discount reportedly applies to buyers prepared to accept the increased risks associated with transporting cargoes through the Strait of Hormuz, a vital route for global oil exports.

Rising Shipping and Insurance Costs

Maritime insurance premiums and freight costs in the Gulf have surged in recent weeks amid instability and concerns over shipping security.

Exports and Production Under Pressure

Iraq’s oil exports have reportedly declined during the past two months amid escalating regional tensions and disruptions to maritime trade.

Production has also been affected, with reports indicating output reductions linked to storage capacity constraints as export flows slowed.