On Oct 3, crude traded in a tug-of-war between renewed Hormuz geopolitical risk and profit-taking from earlier gains. Brent, after dipping nearly 4% intraday, turned positive to close around $102.41/bbl (+0.09%), effectively flat; WTI settled at $91.62/bbl (-1.35%).

Three-Layer Pricing Read

① OSP (Official Selling Price): SOMO left its October Asia OSP unchanged — Basrah Medium at parity to the Oman/Dubai average (+$0.00) and Basrah Heavy at a $3.30/bbl discount. This is the level after two consecutive months of upward revisions (September was -$4.00 / -$7.30).

② Spot discount (term allowance): Per a Bloomberg document dated Sept 29 covering Oct 1–31 loadings, SOMO offered buyers deep discounts — Medium at -$34.50/bbl and Heavy at -$37.00/bbl to the relevant benchmark, deeper than the sub-$30/bbl seen in Aug–Sep. For Asian destinations the benchmark is the Oman/Dubai average; for Europe it is Dated Brent; for the Americas the Argus Sour Crude Index.

③ Loading premium & STS mechanism: Standard non-Hormuz loading premiums are ≥$0.20/bbl for days 1–10 and ≥$3.00/bbl for days 11–30; offshore STS (Fujairah/Oman anchorage) transfers add roughly a 30% handling surcharge. Under geopolitical risk, STS premiums and war-risk insurance (1.5%–2.5% of hull value per 7-day voyage) materially lift delivered cost.

Effective Net Discount Estimate

For Basrah Medium: OSP = Oman/Dubai avg + 0, plus the Oct term discount of -$34.50, implies an FOB net price ≈ Oman/Dubai avg - $34.50/bbl; Heavy ≈ Oman/Dubai avg - $40.30 (-$3.30 OSP - $37.00 term). Versus Aug–Sep, the effective net discount has deepened by roughly $4–7/bbl, reflecting Iraq's need to discount heavily to keep barrels moving given its greater distance from Hormuz and lack of a sizable own fleet.

Spot & Geopolitics

On the spot side, SOMO's sales to Asian buyers still cleared above Dubai +$10/bbl; ADNOC and QatarEnergy also concluded deals at Dubai +$5–13/bbl, showing robust Asian buying absorbing the risk premium. Geopolitically, on Oct 2–3 fresh projectile/cruise-missile strikes hit two crude tankers in and around Hormuz and off Oman (claimed by Iran as enforcing "restrictions"); 17–20 mb/d of crude transits this chokepoint. VLCC spot rates have broken $1 million/day, STS transfers off Oman are delayed ~36 hours and 5–6 days at Indian Ocean anchorages. The U.S. has deployed a third carrier strike group with up to 10,000 personnel and added Patriot batteries in Saudi Arabia/Qatar.

Practical Note

For buyers, Basrah's deep discount is a book-cost advantage, but STS handling fees, war-risk insurance and voyage delays must be built into full landed cost. We recommend pricing locks on a four-segment basis — OSP + term discount + STS premium + freight/insurance — and retaining logistics optionality (East-West Pipeline / Yanbu bypass) for Hormuz contingencies. Data updating; subject to latest.