Iraq’s state tanker company confirmed on the 3rd that it had used a large tanker to move 2 million barrels of crude oil out of the Strait of Hormuz and deliver them to buyers waiting outside the strait. According to a company executive, it was the first time in decades that the state-owned firm had used this method to make deliveries. Other Gulf oil producers had long adopted ship-to-ship transfers to hand over cargoes outside the strait; Iraq, as one executive put it, had “arrived late.”

Ali Kais Abdel Jabbar, president of the Iraqi Oil Tankers Company, said in a statement that ship-to-ship transfers give the State Oil Marketing Organization more initiative and flexibility in selling oil and setting prices. Iraq had previously delivered crude mainly to buyers at the southern oil port of Basra. After the outbreak of the Iran conflict, shipping through the Strait of Hormuz was disrupted. To encourage buyers to “collect the cargo themselves,” Iraq said it was willing to offer a discount of more than $20 per barrel.

However, because neighboring countries were also cutting prices and the shipping risk was too high, Iraq failed to open up its oil sales. Ali Nizar, head of the State Oil Marketing Organization, said: “Competition is extremely fierce. Kuwait and Qatar are offering bigger discounts, as much as $35 per barrel.”

In addition, Saudi Arabia and the United Arab Emirates had already taken the lead, using ship-to-ship transfers to move crude out of the strait and deliver it to buyers.

In September, Iraq’s Oil Minister Bassem Mohamed Khudair al-Abadi hinted in parliament that Saudi Arabia was snapping up tankers and monopolizing capacity, driving up Iraq’s oil-shipping costs. Riyadh denied this.

Iraq is one of the Gulf producers most seriously “strangled” by the chokepoint. Before the war, 95% of Iraq’s oil exports passed through the Strait of Hormuz, and 90% of government revenue depended on oil income. With transit through the strait blocked, Iraq has had to cut oil production on the one hand, and on the other hand sought to reduce dependence on Gulf routes and diversify oil exports, including exports via Turkey and Syria.