Three-Tier Pricing Interpretation

1. OSP Published Differential (Official Discount). Iraq’s SOMO announced on October 8 its November Asia OSP: Basrah Medium priced at -2.80 USD/bbl vs. Oman/Dubai benchmark (flat at 0.00 in October), while Basrah Heavy widened to -5.80 USD/bbl (vs. -3.30 in October). This deepening follows Saudi Aramco’s November Arab Light discount to Asia at -5.00 USD/bbl—the deepest since June 2020—reflecting a volume-defense pricing strategy amid elevated oil prices.

2. Spot Dark Discount (Term Rebate). Recent FOB spot dark discounts for both medium and heavy grades have deepened significantly, reflecting additional buyer incentives from Iraq amid geopolitical risk and vessel constraints.

3. Loading Premium (+30% Mechanism). Non-Hormuz loading (e.g., STS off Oman or Fujairah) commands a landed premium of approx. +5–13 USD/bbl vs. Dubai; September tender premiums were ≥0.20 USD/bbl for loadings 1–10 and ≥3.00 USD/bbl for 11–30 (with an additional +30% applied for offshore STS transfers), further elevating landed cost.

Landed Net Discount Estimation

Using Brent front-month at ~USD 110.12/bbl as anchor: Basrah Medium OSP ≈ USD 107.32/bbl; Basrah Heavy OSP ≈ USD 104.32/bbl. After accounting for freight, war risk insurance, and STS charges, landed ICE Brent parity falls within +12–20 USD/bbl—still among the lowest-sulfur Middle Eastern crudes, though absolute landed cost remains elevated due to high Brent and war risk premiums.

Practical Advisory

Public market data as of October 29 shows Brent at USD 110.12/bbl (-1.36%) and WTI at USD 101.51/bbl (-1.24%), driven primarily by diplomatic de-escalation signals from the Iran–Saudi–Turkey–Pakistan high-level security talks, reducing crude futures risk premium. The Strait of Hormuz remains a core constraint: passage data unavailable (IMF PortWatch reports AIS visibility interruption since March 1, 2026); VLCC daily charter rates remain at elevated levels. Independent Chinese refiners continue locking in November cargoes of Basrah Medium/Heavy and Al-Shaheen via Mercuria/Totsa/TCO to replace Iranian supply. Buyers must factor in war risk and demurrage into landed cost and prioritize STS delivery off Oman to avoid Strait exposure.

Data sources: SOMO / Public Market Interface / IMF PortWatch.