Baghdad (IraqiNews.com) — India’s Reliance Industries (RELI.NS), operator of the world’s largest refining complex in Gujarat, paid an unprecedented record charter fee of $23 million to $25 million for a Very Large Crude Carrier (VLCC) to transport 2 million barrels of Basrah crude from Iraq, according to shipping sources cited by Reuters on Friday, August 7, 2026.
The extreme freight surge—marking a jump from a pre-war average of $2 million to 12 times the baseline global freight rate—highlights severe shipping chokepoints in the Strait of Hormuz caused by the ongoing U.S.-Iran conflict. Daily vessel transits through the strategic waterway have plummeted from a pre-war average of 125–140 ships to a fraction of normal capacity as shipowners avoid military risks.
Key financial & logistics metrics
- Soaring Freight Rates: Reliance chartered the VLCC from South Korea’s Sinokor at 1,200 points on the Worldscale freight index—12 times the reference benchmark—up from pre-war levels of 0.8 to 0.9 times ($2 million total).
- Deep SOMO Discounts: To offset soaring shipping costs and attract buyers into the Gulf, the State Organization for Marketing of Oil (SOMO) offered steep discounts of $25 to $30 per barrel below Dubai regional benchmarks.
- Net Margin Offset: Despite the $25 million freight tag, energy analysts estimate Reliance will still save millions on the overall transaction due to Iraq’s heavy crude price reductions.
- Limited Carrier Pool: Sinokor remains one of the few international maritime operators willing to navigate the Strait of Hormuz to load cargo at Iraq’s Basra Oil Terminal.
While Asian refiners—particularly across India and China—are actively seeking chartered tankers to capture Iraq’s discounted crude allocations, shipowner reluctance continues to limit available tonnage entering the Gulf.
By offering deep price concessions, Iraq’s oil marketing arm is successfully maintaining crude flow off the Basra coast despite soaring war-risk insurance premiums and maritime transport bottlenecks.
