Iran exempts Iraq from Hormuz restrictions, unlocking 3 million barrels daily crude exports

WHAT HAPPENED Iran announced that Iraq is exempt from Strait of Hormuz shipping restrictions previously imposed on commercial vessels, effectively unlocking 3 million barrels per day of Iraqi crude exports. The Iranian military described the exemption as applying to "brotherly Iraq" whilst maintaining restrictions on other nations' shipping through the critical chokepoint that handles roughly 20% of global oil transit.

CHOKE-SHIPPING-001 reverses: chokepoint de-escalation releases constrained supply back into global markets. The causal chain runs exemption announcement → Iraqi crude export normalisation → global supply expectations revised upward → crude futures reprice downward as Hormuz risk premium compresses. Secondary channel: tanker rates for Persian Gulf-Asia routes decline as Iraqi loading resumes, reducing transport costs and amplifying the supply-side price pressure.

Brent crude: bearish pressure toward $90-92 as 3M bbl/d supply returns (currently $97.18). WTI: similar downward revision, likely testing $105-108 support. Tanker equities (Frontline, DHT Holdings): negative on reduced day rates for VLCC Gulf-Asia routes. Energy majors with Iraqi exposure (BP, Eni): positive on restored production capacity. USO: tracking crude lower on supply normalisation.

HIGH. Iraqi exemptions are immediately implementable and the 3M bbl/d volume represents meaningful supply relief. Iran's framing as "brotherly" exception suggests durable arrangement rather than tactical manoeuvre.

Iraqi oil ministry confirmation of export resumption timeline. OPEC+ emergency meeting calls to discuss production adjustments. US Treasury response to sanctions circumvention concerns. Iranian extension of exemptions to other regional allies.