Baghdad Submits Revised Pricing Scheme
Iraqi crude customers indicated on December 20th that Baghdad has again demanded a surcharge to be paid into an account outside U.N. control, just one day after the U.N. sent notification to buyers ordering them not to pay any surcharge.
Traders said that Baghdad had waived the surcharge for customers who had incurred large costs while waiting at the Gulf port of Mina al-Bakr during the recent 12-day Iraqi export stoppage, but had telephoned customers to ask for a 30-cent surcharge for Kirkuk crude sales.
Traders also said that Iraqi state oil marketer SOMO is asking its customers for a 40-cent premium for January sales of its Basrah Light crude, although they indicated that the charge could be cut to 30 cents to match that for Kirkuk.
Iraqi officials have repeatedly denied the surcharge demand, but some traders wondered whether continued refusals on the part of Iraqi crude customers to pay the premium will lead to another export stoppage.
Late on December 19th, the U.N. sanctions committee rejected an Iraqi proposal to cut its December crude prices for European customers by 80 cents in an effort to resume loadings of its Kirkuk crude at the Turkish port of Ceyhan.
Oil overseers indicated that recent price weaknesses in rival Russian Urals grade crude did not justify an 80-cent cut, but suggested that a 50-cent drop could be considered.
SOMO quickly countered with an amended price proposal covering December and first half January oil sales for European markets, but no pricing mechanism has been submitted for U.S. and Asian markets.