Is it safe now? Iraq informs buyers that they can withdraw oil themselves, and the crude oil is "exempted" from crossing the Strait of Hormuz.

Zhitong Finance APP learned that Iraq has informed Asian traders and refiners that, because its crude oil tankers have been granted exemptions by Iran, they are now able to transit the Strait of Hormuz, and buyers may arrange to load the crude oil themselves. This move is currently testing buyers’ confidence in this country’s safety assurance commitments. In a notice issued by the Iraq National Oil Marketing Organization (SOMO) last Sunday, the organization cited media reports that Iraq’s crude oil shipments are now “not subject to any potential restrictive measures.”

Over the weekend, an Iranian military spokesperson said in a video statement published by the state news agency Islamic Republic News Agency (IRNA) that “brother country Iraq” is exempt from any restrictions Iran has imposed on the Strait of Hormuz, and that the relevant restrictions apply only to “hostile countries.” If the exemption is implemented, it could theoretically free up up to 3 million barrels per day in Iraqi oil cargo transport volume.

SOMO asked buyers to submit loading plans, including the vessel name, vessel type, and the required quantity, and said that all loading terminals, including Basra, are “fully operational.” Customers need to respond within 24 hours.

The organization did not immediately respond to a request for comment. It is still unclear whether the above exemption arrangement applies to all Iraqi crude oil, or only to the country’s own tankers. Buyers are taking a cautious stance toward this move.

The Iranian military spokesperson did not disclose which specific tankers or cargoes are covered, but a tanker called “Ocean Thunder,” carrying 1 million barrels of Iraqi crude oil, already transited the narrow waterway on Sunday.

Iraq typically sells crude oil on an FOB (free on board) basis, meaning the refineries are responsible for transporting the cargo themselves. But since the Strait of Hormuz was effectively closed a month ago, Iraqi crude oil exports have been obstructed.

Some Asian buyers said they are seeking clarification on the relevant conditions, including whether Iraq will provide its own tankers for transport, so as to provide additional safety assurance when transiting the Strait of Hormuz.

Apart from a pipeline system that runs through Turkey, Iraq’s alternative capacity is very limited for bypassing this narrow waterway connecting the Persian Gulf with the rest of the world. Iraq’s March crude oil export volume fell sharply by about 97% from the previous month, leaving an average of just 99k barrels per day.

Over the past week, transport volumes through this key waterway have shown signs of recovery. Data from last Saturday showed that the seven-day moving-average transit volume hit the highest level since the outbreak of war. But compared with pre-war levels, total transit volume still remains only a trickle.

Iran’s control over the Strait of Hormuz is one of its most important bargaining chips in the current conflict. This exemption statement is the largest-scale loosening of Iran’s transit arrangements to date.

Theoretically, this exemption could have significant impact: Iraq is one of the world’s major oil producers, and its daily production involves an export scale of up to 3 million barrels.