Iraq Is Struggling To Get Its Oil Through The Hormuz Strait. It’s Offering Millions In Discounts To Those Daring To Take It

Iraq's state oil marketer is offering millions in discounts to potential buyers daring to load up its crude and take it through the Strait of Hormuz, according to a new report.

Reuters detailed that SOMO is seeking for buyers to say how much oil they could take from the Basrah Oil Terminal or the single-point moorings and associated facilities.

The company is offering discounts of up to $27 a barrel for Basrah Medium depending on the loading window, and almost $30 a barrel for Basrah Heavy.

Iraq is OPEC's second-largest oil producer, but most exports must pass through the Persian Gulf and the Strait of Hormuz before reaching global markets.

That reliance has severely exposed Iraq to disruptions caused by the U.S.-Iran war and attacks on commercial shipping and regional energy infrastructure. Iraq's oil production dropped to approximately 1.9 million barrels per day in June, down more than 50% from roughly 4.2 million barrels per day in February, according to OPEC data cited by CNBC.

The country did sign an an agreement with Syria to rebuild a long-dormant oil pipeline. The proposed project would restore the pipeline connecting the oil-rich city of Kirkuk in northern Iraq with Syria's Mediterranean coast. The route has a nameplate capacity of about 700,000 barrels per day, according to the U.S. Energy Information Administration figures. It has been out of service since it was damaged during the 2003 U.S.-led invasion of Iraq.

However, tensions in the region continue in the meantime and it is uncertain whether the U.S. and Iran are moving towards de-escalation.

President Donald Trump said in a social media post on Saturday night that his administration was asked "by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to," including the "Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat."

"Based on this request, I have agreed, for the future benefit of the WORLD and, likewise, the survival of a successful and prosperous Iran, to cancel the attack, subject to being able to rapidly make a DEAL," Trump added in the publication.

However, Iranian foreign ministry spokesperson Esmail Baghaei rejected the notion, saying the country had only discussed navigation through the Strait of Hormuz with Oman.

Baghaei claimed that the countries are engaging in an effort to "determine, at the earliest opportunity and in consultation with Oman, a route that is naturally temporary and based on which the safety of navigation through the Strait of Hormuz can be ensured.

"This agreement (with Oman) is solely about the mechanism and future shipping route while preserving the sovereign rights of both countries and has no connection to whether the Strait of Hormuz is open or closed," he added.