According to reports from Reuters, Reliance Industries has paid between $23 million to $25 million to charter a single supertanker to lift Iraqi crude oil, representing one of the highest freight bills recorded during the ongoing West Asia conflict. The charter, booked at 1,200 World Scale, represents a cost twelve times the benchmark freight rate that prevailed before the Iran war began at the end of February. Before the conflict, similar charters were priced at $2 million for comparable voyages, making the current cost more than ten times that amount. As Reuters reports, this demonstrates the soaring shipping costs and vessel shortage in the Gulf region.
As reported by Reuters, vessel-tracking data shows that shipping traffic through the Strait of Hormuz has fallen sharply, with only 33 ships transiting the strait between Monday and Thursday, down from 50 during the same period a week earlier. This dramatic reduction reflects growing security risks as markets monitor Iran-Oman talks on reopening the strategic waterway. The Strait of Hormuz serves as the only exit point for Iraq's seaborne crude oil exports, with traffic falling dramatically since hostilities began. Before the conflict, the waterway handled 125-140 vessel transits per day, but only a fraction of pre-war traffic continues to move through the strait as attacks on commercial vessels have made the passage genuinely dangerous. The tanker will be supplied by South Korea's Sinokor, one of the few shipowners that continues to operate through the contested waterway despite growing security risks.
According to Reuters, Iraq's state oil marketer SOMO is currently offering crude at discounts of $25 to $30 per barrel below Dubai benchmarks to attract buyers willing to navigate the Strait of Hormuz. On a cargo of 2 million barrels, these discounts translate to significant commodity-level savings relative to spot market pricing. Despite the record freight costs, shipping sources indicate Reliance is still expected to save millions of dollars net on the cargo, making the trade economically viable despite extraordinary charter costs. The discounts are designed to encourage buyers to lift cargoes from terminals in Hormuz, with SOMO figures showing that Iraq's oil revenues have declined sharply this year.
As reported by Reuters, several other Indian and Chinese refiners have been seeking vessels this week to load crude at Iraq's Basrah Oil Terminal, attracted by the significant price discounts. However, shipping sources noted that no additional charters had been fixed, with most shipowners remaining unwilling to commit vessels to the waterway under current conditions. The Reliance charter demonstrates that economic incentives exist at current Iraqi discount levels, though whether more vessels follow will depend on how risk-reward calculations evolve in coming weeks. Iraq's oil revenues have declined significantly, with SOMO figures showing the country earned $18.679 billion from exporting 268.1 million barrels of crude in the first half of 2026, compared with more than 606 million barrels exported during the same period of 2025.
According to Reuters, Reliance operates the world's largest refining complex at Jamnagar in Gujarat, designed to process a wide variety of crude grades and optimise margins across different market conditions. The company's willingness to pay record charter rates signals a strategic judgment that supply security arguments outweigh cost considerations at current discount levels, diversifying Reliance's crude slate at a time when regional supply chains are under stress. The broader oil market will closely monitor this development as it demonstrates the economic incentive to breach shipping reluctance around Hormuz exists at current Iraqi discount levels, with the tanker's supply by South Korea's Sinokor highlighting the limited pool of operators willing to operate in the contested waterway.
