Resumption of Iraqi flows via Strait of Hormuz? in International Shipping News 10/04/2026 Iraq—having recorded the largest oil supply shut-in volumes during the US–Israel–Iran conflict—may soon see a recovery in both production and exports following an agreement with Iran. For the first time since the conflict began, an Iraqi-laden crude tanker transited the Strait of Hormuz on Sunday. The return of Basrah barrels would provide a welcome source of medium and heavy sour oil for Asian buyers, primarily India, China, South Korea and Southeast Asian countries. Market & trading calls: Rather slow return of Iraqi oil supply over a 3 month period, with crude and condensate production rising from currently 900 kbd to above 4 Mbd in late June/early July. Around 17 Mbbls in onshore inventories and over 20 Mbbls of Iraqi crude in floating storage in the Persian Gulf, ready to move through the Strait. Bearish impact on oil prices if the return of over 3 Mbd Iraqi crude materialises, with impact first felt for medium and heavy sour differentials. Iraqi and Iranian officials have recently been negotiating terms to allow Iraqi crude to transit the Strait of Hormuz once again. While no formal agreement has been announced, Iran appears to have granted Iraq a de facto exemption for its oil shipments, likely contingent on the payment of a transit fee. Kpler data supports this development: the Iraqi-owned vessel Ocean Thunder, which loaded close to 1 Mbbls of Basrah Heavy on 3 March, remained stranded in the Persian Gulf throughout March before transiting the Strait on 5 April. The cargo is expected to discharge at Malaysia’s Pengerang refinery on 18 April, marking the first Iraqi crude shipment since 28 February. Source: Kpler, mapbox On Sunday, Iraq’s SOMO requested lifting schedules from buyers, including vessel details and volumes, noting that all loading terminals—Basrah included—were “fully operational.” That said, uncertainty persists. Transit remains tightly controlled, and Iraq lacks firm guarantees of uninterrupted passage. Moreover, as Iraq sells crude on a FOB basis (i.e., responsibility transfers to the buyer once the cargo is loaded), buyer confidence will need to rebuild before volumes recover meaningfully. After several successful voyages, however, purchasing activity is likely to accelerate rapidly. How quickly can Iraqi crude supply return—and at what volumes? We estimate that Iraq has currently shut in around 3.4 Mbd of crude production (from 4.25 Mbd pre-war of cru/co supply down to 875 kbd now), largely due to export constraints. The country remains heavily reliant on southern Gulf exports, with limited diversion options (some 200 kbd via Kirkuk–Ceyhan pipeline) and constrained storage capacity. Although drone strikes occurred in early March and again on 4 April—targeting storage facilities west of Basra and the North Rumaila oilfield—no significant damage has been reported. The attacks appear to have hit equipment storage areas rather than critical infrastructure, suggesting minimal repair requirements. Overall, production shut-ins are primarily driven by export bottlenecks rather than physical damage. Still, we estimate that a full recovery in Iraqi oil output would take around three months, depending on operational conditions. Source: Kpler Assuming transit arrangements hold, Iraq would first draw down its oil inventories (onshore storage close to 17 Mbbls) and then ramp up supply. Initial cargoes are expected to come from volumes a