Iraqi oil exports up as end users learn to live with surcharge
Iraq increased oil production by 500,000 barrels per day (bpd) in January as end users began to accept the surcharge levied by Baghdad that circumvents UN control of its revenues, Middle East Economic Survey (MEES) reported Monday.
Iraq's January oil production totalled 1.7 million bpd, of which 1.1 million were exports under the UN oil-for food programme and the remaining 600,00 bpd were for domestic refineries and cross-border trade with Jordan, Syria and the Gulf, the Cyprus-based industry newsletter said.
Iraq's oil production in December was 1.2 million bpd and has averaged around 2.5 million bpd over the past two years, it said.
"More end users are beginning to accept the fact that they have to live with the new surcharge system, especially after seeing that other companies are buying the crude without any consequences."
MEES said the US market is snapping up most of Iraq's UN-authorized oil exports through small companies and traders -- who pay the surcharge -- while end users in Korea, Singapore and lately Europe have also started buying Iraqi crude.
Iraq, which has been under embargo since its 1990 invasion of Kuwait, decided on January 18 to cut the surcharge from a flat 40 cents a barrel to between 25 and 30 cents.
Baghdad suspended oil exports on December 1 after the United Nations rejected its proposed pricing formula for the month. Sales resumed on December 13, but at a slow rate.
UN officials blamed the dispute on a Iraqi bid to charge less than the market value for its oil, to offset a surcharge originally set at 50 cents a barrel which it wanted customers to pay, in breach of sanctions.
Iraq is authorized to export crude -- with the revenues paid into a UN escrow account -- to finance imports of humanitarian supplies.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)