I. Three-Layer Pricing Breakdown
1. OSP (Official Selling Price): Iraq's SOMO kept the October Asia OSP at Basrah Medium parity (+$0.00) to the Oman/Dubai average and Basrah Heavy -$3.30/bbl, each tightening $4.00 from September (-$4.00 / -$7.30) — a stable reading after the second consecutive monthly uplift (set Sep 13, valid for all of October).
2. Spot Term Discount: Per Bloomberg's Sep 29 pricing notice (corroborated by Reuters, SquawkNews and Zawya), October-loading (Oct 1-31) term discounts are Basrah Medium -$34.50 and Basrah Heavy -$37.00/bbl FOB, deepening from the sub-$30 discounts of August-September. Baghdad, sitting farther from Hormuz and lacking a sizable fleet, is leaning on steep markdowns to keep buyers lifting barrels through the Gulf.
3. Loading Premium: Off-Hormuz STS transfer premiums have widened with war risk; the 11-30 day loading STS premium adds a further +30% over the benchmark, forming the third cost layer to-hand.
II. Net-to-Hand Differential
Against the Asian destination benchmark (Oman/Dubai average): Medium FOB net ≈ benchmark -34.50; Heavy ≈ benchmark -37.00. After layering war-risk insurance (still elevated vs the ~0.15% peacetime rate) and VLCC spot freight (TD3C briefly above $1M/day), the effective net-to-hand discount sits at roughly -$30 to -$37/bbl. The deep markdown is offset by freight and insurance, not passed through as a cheaper delivered barrel.
III. Hormuz & Practical Notes
As of Oct 8, maritime-security data show at least 12 tanker attacks/attempts/harassment incidents around Hormuz during Sep 28-Oct 5 — the highest weekly frequency since the Iran war began; the Panama-flagged tanker On Peace was struck by an unidentified projectile, injuring 12 crew (Reuters/Gulf News). UKMTO noted at least 9 attacks in the strait so far this month, already half of September's combined Hormuz+Gulf tally.
Yet Gulf supply resilience is visible: Kpler puts September Gulf (ex-Iran) crude+condensate exports at ≥16.5 mb/d, near the pre-war average; only ~60% crossed Hormuz (vs 83% pre-war), the rest via the East-West pipeline, alternate routes and STS. Shell's CEO says Middle East seaborne flows have recovered to ~80% of pre-war. The White House is reported to have asked the Pentagon to draft Iran strike options before the midterms, keeping the risk premium alive.
Practical note: Buyers fixing October Basrah cargoes should prefer Oman off-shore STS delivery to avoid in-strait risk; settlement still follows OSP + term discount, and the deep-discount window does not equal a cheaper delivered barrel — freight and war risk are the real cost variables now. Sources: Reuters / SquawkNews / Bloomberg (Argus-sourced) / Kpler / Gulf News / Sina / China Fund.
