The OPEC member is offering reductions of up to $33.40 per barrel on its benchmark Basrah Medium grade. (AI image)

With oil supplies via the Strait of Hormuz still disrupted, Iraq is now offering deep discounts to buyers for picking crude from the country. Iraq has rolled out steep price cuts for buyers with term contracts on crude cargoes scheduled for loading this month.However there is a catch: The shipments would still require passage through the Strait of Hormuz to lift oil from terminals which are located deep within the Persian Gulf at a time of heightened regional tensions.Shipping through the Strait of Hormuz has been severely disrupted since the conflict escalated toward the end of February, and renewed clashes between the US and Iran on Monday have raised fresh concerns about the durability of a four-week ceasefire. Iraq had earlier moved to curb output as storage facilities filled up quickly when exports from the Gulf were interrupted.Also Read | UAE’s exit from OPEC & OPEC+: Shaking world oil order but benefit for IndiaAccording to a document dated May 3 issued by state oil marketer SOMO and reviewed by Bloomberg, the OPEC member is offering deep discounts of up to $33.40 per barrel on its benchmark Basrah Medium grade. The notice outlines varying discount levels applicable across different time windows during the month.Data compiled from vessel tracking shows that only two tankers loaded crude from Iraq’s southern Basrah port in April, a sharp drop from 12 in March, as empty vessels struggled to enter the Gulf via Hormuz. Under normal conditions, the port handles up to 80 loadings a month. While Iraq continues to export oil through a pipeline via Turkey, volumes remain significantly lower than seaborne shipments.The notice also states that any buyer accepting the May pricing terms cannot invoke force majeure, as the offer has been made under already prevailing exceptional circumstances. For cargoes loaded between May 1 and 10, Basrah Medium is discounted by $33.40 per barrel, with the reduction narrowing to $26 for the remainder of the month. Basrah Heavy is being offered at $30 below official prices.In a separate development, SOMO last week floated a spot tender for Qaiyarah crude, though those shipments too would need to be lifted from within the Persian Gulf, traders said.