Over the long weekend, we reported that with traffic across the Hormuz strait continuing to rise, and reaching the highest since the war began, one particularly favorable development was Iran's permission for Iraqi ships to use the Strait. We also noted that this declaration had the potential to unleash as much as 3 million barrels a day of Iraqi oil cargoes.

That said, there was the caveat that it was not immediately clear if the exemption will apply to all Iraqi oil or just the nation's tankers, or indeed how it will be enforced. Furthermore, an Iraqi official cautioned that the usefulness of the exemption will depend on whether shipping companies are willing to risk entering the strait to collect cargoes.

Today Iraq underscored this last point when the Gulf state told traders and refiners they can collect crude cargoes as vessels carrying the country's oil are now able to transit the Strait of Hormuz thanks to an Iranian exemption, testing buyers' confidence in the security guarantee.

In a notice sent on Sunday, the country's State Organization for Marketing of Oil, known as SOMO, said Iraqi shipments were now "exempt from any potential restrictions," citing media reports. 

It asked buyers for lifting schedules, including vessel details and volumes requested, adding all loading terminals including Basrah were "fully operational." Customers were given 24 hours to respond.