Why is Iraq offering such large discounts on its oil? Officials explain the reasons.
Why is Iraq offering such large discounts on its oil? Officials explain the reasons.
2026-08-05
Shafaq News – Baghdad
Oil officials confirmed on Wednesday that Iraq’s reliance on selling most of its oil exports under the FOB system is due to the limited size of its maritime fleet, which forces it to depend on foreign tankers to transport the bulk of its exports.
Officials told Shafaq News Agency that the FOB system means that Iraq’s responsibility ends once the oil is loaded onto the tanker at export ports, while the buyer bears the costs of shipping, insurance and maritime transport risks.
They added that Iraq has only a limited number of tankers belonging to the Iraqi Oil Tankers Company, most notably the two giant tankers “Akkad” and “Baghdad”, in addition to “Tigris” and “Euphrates”, but these capabilities are not sufficient to transport Iraqi exports, which exceed three million barrels per day, which makes it depend heavily on global shipping fleets.
They explained that this reality deprives Iraq of additional revenues from transportation and insurance fees, reduces the added value of its oil exports, and limits its flexibility in marketing crude oil, which sometimes pushes it to offer discounts on official selling prices to maintain the competitiveness of Iraqi oil in global markets, unlike some Gulf countries that have national maritime fleets and transportation companies that enable them to achieve additional revenues from shipping and insurance services.
The sources indicated that Iraq previously had a larger naval fleet, but wars and economic sanctions led to a decline in its capabilities and the decommissioning of most of its tankers. They stressed that rebuilding a modern national fleet would enhance the security of oil exports, reduce dependence on foreign companies, and provide an additional financial resource for the state.
According to the mechanisms adopted by the Iraqi Oil Marketing Company (SOMO), the majority of crude oil exports are marketed on the FOB (Delivery on Board) system, under which the buyer bears the costs of transportation and insurance after the shipment is loaded.
Iraq exports more than 3 million barrels per day, and oil revenues constitute the main source of state income, accounting for more than 90% of public revenues.
shafaq.com
