Iraq's SOMO grants fuel oil export contracts via Syria

BAGHDAD,— Iraq’s oil marketing company SOMO has completed agreements to deliver around 650,000 metric tons of fuel oil each month from April through June by truck via Syria, according to Iraqi energy officials and a SOMO document, Reuters reported.

Iraq has not relied on this overland route for many years. Two sources with knowledge of the matter said the end of the Syrian conflict and disruptions tied to the Iran war have made it the most practical route, even with higher expenses.

Two sources said the first group of trucks entered Syria on Tuesday.

The contracts were awarded to four Iraqi traders after the United States and Israel carried out strikes on Iran in late February, leading to the effective shutdown of the Strait of Hormuz.

Output cuts have followed as producers face storage limits due to shipping problems. Three Iraqi energy officials said production from key southern fields has fallen by about 80% to near 800,000 barrels per day.

The officials requested anonymity as they are not permitted to speak publicly.

Before the disruption linked to the Iran war, Iraq exported most of its fuel oil through the Khor al-Zubair port in the Gulf using sea transport.

Shipping by road is more expensive and harder to manage than tanker transport, but officials said options are limited.

The SOMO document indicated that two traders will each receive 720,000 tons of high sulfur fuel oil over three months, with discounts estimated between $160 and $170 per ton.

A third trader will handle 401,000 tons at about $160 per ton, while a fourth secured 90,000 tons at close to $155 per ton.

Supplies will come equally from refineries in the north, center and south, the document showed.

Deliveries are planned each month during the contract period, reflecting changes in transport and regional conditions affecting exports.

(With files from Reuters)