Iraq holds tender for oil supertankers amid military threats in Strait of Hormuz

Iraq is putting out a call for supertankers. The Iraqi Oil Tankers Co. (IOTC) has launched a tender to charter two or more very large crude carriers, known as VLCCs, for 180 days to keep its oil flowing through the Strait of Hormuz. The tender is set to close around September 10-11, 2026, and it comes after Iraq’s cabinet formally approved the tanker hiring effort on September 4.

Iraq’s crude oil exports have plummeted by over 97% since late February 2026, when conflict-related disruptions tied to the Iran situation turned the Strait of Hormuz from a busy shipping lane into something closer to a no-go zone for commercial vessels.

The math behind the desperation

SOMO, Iraq’s state oil marketer, is now offering crude at discounts of $25 to $30 per barrel below Dubai benchmarks. Freight rates for chartering VLCCs have hit record levels, with recent charters reportedly costing $23 to $25 million to transport approximately 2 million barrels.

SOMO has also introduced ship-to-ship transfer options near Oman as an additional sweetener. If buyers are too nervous to sail deep into the Persian Gulf, Iraq will meet them closer to safer waters.

Why the Strait of Hormuz matters so much

The Strait of Hormuz is a narrow waterway between Iran and Oman that serves as the single most important chokepoint in global energy logistics. In normal times, roughly a fifth of the world’s oil supply passes through it daily. War-risk insurance premiums have surged, making every voyage through the waterway significantly more expensive.

Iraq is far from the only producer affected, but its geography makes it uniquely vulnerable. Unlike Saudi Arabia, which has pipeline alternatives to bypass the strait, the vast majority of Iraqi crude must transit through Hormuz to reach international markets.

Longer-term fleet ambitions

The tender for VLCCs is a short-term fix, a 180-day bridge to keep at least some barrels moving. But Iraq’s government is also reportedly exploring longer-term expansion of its own tanker fleet to reduce dependence on the spot charter market.

The cabinet approval on September 4 signals that Iraqi leadership views this as more than a theoretical exercise.

When it costs $23 to $25 million just to move 2 million barrels of crude, those transportation costs get baked into the final price of oil. With Iraq offering discounts of $25 to $30 per barrel and still struggling to find buyers, the implied cost of risk in the region has reached levels that fundamentally alter the economics of Persian Gulf crude.

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