ADNOC buys 72 million barrels of discounted Iraqi crude, sources say

Key Points

1. ADNOC's trading arm agreed to buy 72 million Iraqi barrels for August and September at steep discounts, sources said.
2. Iraqi exports had collapsed during the Iran war before recovering to about 2 million barrels per day this month.
3. The purchases turn Abu Dhabi's state oil firm into a major trader of rival Gulf crude.

The latest:

Abu Dhabi National Oil Co has bought millions of barrels of discounted crude from Iraq’s state marketer SOMO, three people familiar with the matter told Reuters, making it the largest lifter of Iraqi oil in August and September. Two Iraqi energy sources said the purchases helped revive Iraqi exports that had been sharply curtailed in the earlier months of the Iran war.

Details:

• The volumes: ADNOC agreed to buy 32 million Iraqi barrels in August and a further 40 million in September, one Iraqi source said. The September tranche included 10 million barrels at an $18-a-barrel discount and 30 million barrels at a $25 discount.
• The August discounts: Discounts on August volumes ranged from $24.90 to $27 a barrel, the same Iraqi source said, a markdown that reflects how hard Baghdad was working to move crude out of the northern Gulf while shipping routes were disrupted.
• Conflicting accounts: A second Iraqi source said SOMO allocated ADNOC 32 million barrels in August but the company lifted only 20 million, citing export constraints and Basra Oil Company’s inability to secure sufficient crude. That source said ADNOC had lifted 14 million barrels so far in September.
• A third figure: A third source put ADNOC’s purchases at about 20 million barrels bought from SOMO in tenders at discounts of $25 to $27 a barrel, for lifting across September and October. The three accounts were not reconciled.
• Other buyers: SOMO’s steeply discounted August-loading cargoes also drew Chinese state majors PetroChina and Zhenhua Oil, alongside TotalEnergies, Vitol, Trafigura, Mercuria and Cathay Petroleum, trade sources told Reuters earlier.
• Iraq’s bottleneck: Iraqi exports were hit early in the war partly because of the country’s position at the top of the Gulf and its lack of a national shipping fleet. Iran last month allowed a number of tankers carrying Iraqi oil through the Strait of Hormuz after repeated requests from Baghdad, IRNA reported.
• ADNOC’s advantage: The state-owned company has become more nimble since the war began, using an expanding tanker fleet and a pipeline to the port of Fujairah to move oil out of the Gulf and past the Strait of Hormuz, according to Reuters.
• The export numbers: Iraq has been exporting about 2 million barrels per day this month, down from 2.354 million bpd in August but well above July’s 1.374 million bpd, Kpler data showed. UAE crude exports rose to 3.236 million bpd from 2.886 million in August.
• The endgame: ADNOC plans to process most of the crude bought 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.
• Tehran and Abu Dhabi: Despite attacks on some ADNOC tankers, Iranian President Masoud Pezeshkian met UAE Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan at the BRICS summit in New Delhi on Sunday, saying the two sides had agreed to “put the past behind them.”

Between the lines:

Reuters frames the purchases as an expansion of ADNOC’s trading role rather than a simple supply deal. The logic is in the logistics: Iraq sells at discounts of up to $27 a barrel because it cannot reliably ship, while ADNOC can move oil via Fujairah and its own tankers. Buying cheap Iraqi barrels for Ruwais frees Abu Dhabi’s own grades for export at full price.

What’s next

Watch October lifting volumes against the 20 million barrels cited by the third source, whether SOMO’s discounts narrow as Iraqi exports recover toward August levels, and whether Iran keeps clearing Iraqi-oil tankers through Hormuz.