TotalEnergies SE is offering Iraqi oil to refiners in Asia, suggesting a notable increase in the supply of crude available from the Middle East. This move by a major oil company signals that despite ongoing tensions, more oil is reaching the global market, particularly in Asia. The company's trading arm is known for its extensive operations, having traded approximately 7 million barrels a day of crude oil and refined products last year, representing about 7% of global supply. TotalEnergies recently reported a substantial $2 billion in annual profits from its oil trading activities, partially driven by a significant buying spree of Middle Eastern oil, according to CEO Patrick Pouyanné. TotalEnergies also has a $10 billion investment plan with the Iraqi government to boost oil, gas, and power production.
This development comes after Iraq's State Organization for Marketing of Oil (SOMO) announced on Sunday that Iraqi shipments are now "exempt from any potential restrictions" when transiting the Strait of Hormuz. This exemption, granted by Iran, allows vessels carrying Iraqi crude to safely cross the critical waterway, boosting buyers' confidence in the security of these shipments. An Iraqi oil tanker, the Omega Trader, successfully navigated the Strait, marking the first Iraqi export since the near-closure of the strait, and carrying a substantial cargo, reportedly to a key Asian recipient. This demonstrates Iran's selective approach to oil flows through the Strait.
The increased availability of Middle Eastern oil is further evidenced by Kuwait's recent offer to sell its crude to Asian buyers for the first time since the war began. Kuwait is offering at least 4 million barrels of its main export grade, carried on two very large crude carriers, to refiners in China and South Korea. These combined actions from Iraq and Kuwait, facilitated by the conditional opening of the Strait of Hormuz for certain shipments, indicate a notable shift in the regional oil market dynamics and an easing of supply concerns from the Persian Gulf. Overall, it points to a market with swelling supply from key producing nations in the region.
