Iraq offers record $37 oil discounts to keep October buyers

Summary

• SOMO cut October crude prices by as much as $37 a barrel, according to a Bloomberg document.
• August and September discounts stayed below $30, making the October offer a sharp escalation.
• The pricing shows Baghdad paying to hold market share as Gulf shipping risk rises.

The latest

Iraq's state oil marketer is offering contractual crude for October 2026 at discounts of up to $37 a barrel against regional benchmarks, according to a Bloomberg document dated September 29. The terms cover loadings from October 1 to 31 and are designed to keep buyers lifting barrels through the Gulf. SOMO's chief has pointed to freight costs and tanker scarcity as pressures on Iraqi sales.

Details

• The numbers: According to the Bloomberg document, SOMO offered Basrah Medium at a discount of $34.50 a barrel and Basrah Heavy at up to $37 a barrel, with the exact level varying by export destination. The document covers loading dates spanning the full month of October 2026.
• The comparison: The October terms mark a substantial widening from the previous two months. Discounts in August and September stood below $30 a barrel, meaning Iraq has moved several dollars deeper in a single pricing cycle to keep contractual volumes moving.
• How it is priced: Cargoes headed to Asia are priced off the average of Oman and Dubai crude, European cargoes against dated Brent, and shipments to North and South America against the Argus index for high-sulphur crude, according to the document.
• The shipping problem: The discounts are intended to encourage buyers to keep moving barrels through the Arabian Gulf despite the risks facing vessels during the Middle East war. Baghdad lacks a large shipping fleet of its own and sits farther from the Strait of Hormuz than its neighbours.
• SOMO's account: SOMO president Ali Nizar said on September 20, speaking on the Iraqi parliament's official YouTube channel, that intense competition among Gulf producers had pushed some buyers toward other suppliers offering deeper discounts.
• The freight squeeze: Nizar also said rising maritime transport costs and a shortage of available very large crude carriers had made some cargoes economically unviable for buyers, a pressure that falls directly on a seller without its own tanker capacity.
• No further comment: SOMO issued no additional comment in response to requests for clarification made outside official working hours. The company has not published a breakdown of which destinations receive the deepest end of the $37 discount.

Background

SOMO markets Iraq's crude exports on behalf of the state and sets monthly official selling prices by grade and destination. Basrah Medium and Basrah Heavy are its main export streams, priced against separate regional benchmarks for Asian, European and American buyers.

Between the lines

Two of the pressures SOMO's own chief named — freight costs and tanker scarcity — raise the delivered cost of Iraqi barrels without any change in the crude itself. With no national fleet and a longer haul to Hormuz, price is the main lever Baghdad controls, which is consistent with a discount moving from under $30 to $37 in one cycle while competitors court the same buyers.

What's next

Watch SOMO's November pricing sheet for whether the $37 level holds or widens further, Iraqi export volumes for October loadings, and any shift in freight rates or tanker availability in the Gulf.

Source: Al-Eqaria (Egypt), citing a Bloomberg document; SOMO