Iraq's state-owned marketer SOMO is offering fuel oil via a tender for September lifting, though trade sources said participation is expected to be muted amid persisting risks for ships transiting the Strait of Hormuz.
SOMO offered straight-run high sulphur fuel oil for loading during the first week of September, according to trade sources and a tender document reviewed by Reuters. The Iraqi-origin fuel oil can be lifted via ship-to-ship transfer with floater tanks at two loading points, according to the document.
Loading points include the anchorage area within Iraqi waters near the Khor Al-Zubair terminal, as well as the anchorage area located within Oman's waters near Sohar terminal outside the Strait of Hormuz.
Buyers can opt to lift from either one or both of these loading points. The total available volume is 420,000 tonnes, with volumes varying for each floater tank. The tender will close on August 24.
SOMO has turned to offering its fuel oil for monthly lifting instead of its typical longer term-basis tenders, following a brief lull in hostilities between the US and Iran in June.
The marketer has continued to issue tenders even though the Strait of Hormuz remained largely shut after tensions subsequently re-escalated, trade sources said. Oil companies typically do not comment on commercial trades and tenders.
Potential buyers showed muted interest though amid persisting shipping risks within the region.
"There will be little to no participation as no one wants to work (their vessels) in an active war zone," a fuel oil trader said.
Shipping traffic through the Strait of Hormuz, the key Persian Gulf waterway where Iraqi oil and fuel exports typically exit, remained near a stalemate in recent days as US-Iran discussions to end the war remained in a deadlock.
"The penalty of demurrage is crazy," another fuel oil trader said, referring to the penalty fee to be paid by a shipper or receiver when cargo or shipping containers stay inside a port or terminal longer than the agreed loading period.
Total fuel oil exports from Iraq were at about 171,000 tonnes in July, up just slightly from 156,000 tonnes in June, based on Kpler data. Iraq typically exported a monthly average of more than 1.2 million tonnes of fuel oil before the US-Israeli war with Iran.
(Reporting by Jeslyn Lerh and Liu Siyi; Editing by Ronojoy Mazumdar)
