US snaps up most Iraqi oil exports
The US market is snapping up most of Iraq's UN-authorised oil exports while European and Asian end-users are shying away from Iraqi crude, the Middle East Economic Survey (MEES) reported on Monday.
The Cyprus-based industry newsletter said that Iraq's oil exports under a UN humanitarian programme were running at around one million barrels per day (bpd), or under half the normal rate of 2.2 million bpd.
"US refiners are buying the overwhelming majority of Iraqi oil exports" through small companies and traders, said MEES, adding however that precautions were being taken against the payment of illegal surcharges to Baghdad.
"The US firms demand a letter from the sellers that no surcharge outside the UN's jurisdiction is being paid to the Iraqi authorities."
MEES reported last week that Iraq, which has been under embargo since its 1990 invasion of Kuwait, had found customers for its oil exports after lowering a surcharge which circumvents UN control of its revenues.
The Iraqi government decided on January 18 to cut the surcharge from a flat 40 cents a barrel to between 25 and 30 cents, it said.
"Major consuming countries are turning a blind eye to Iraq's efforts to impose the surcharge, perhaps because Iraqi oil supplies are needed in order to help bring world oil prices down," MEES said.
It said US and British oil majors such as ExxonMobil, Texaco and BP, whose countries take the hardest line on implementing the sanctions regime on Iraq, had been purchasing Iraqi oil through third parties, often small companies.
Iraq 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.
But MEES said there was "no end in sight to the disruption of Iraqi oil exports" because oil majors were keeping away due to legal complications linked to the surcharges and also because the Kirkuk crude from northern Iraq was over-priced.
Iraq was "determined to stick to the surcharge as another way of eroding the sanctions" but had failed to win the backing of supporters such as Russia, whose Energy Minister Alexander Gavrin visited Baghdad last week, according to MEES.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)