Iraq decides the price of its own oil, optimistic about resolving impasse

Published December 4th, 2000 - 02:00 GMT

Iraq said Sunday it was free to set the price of its own oil after halting crude exports following a pricing row with the United Nations, but added it was optimistic the impasse would soon be resolved. 

 

"Iraq is free to set crude prices according to its own interests," Deputy Prime Minister Tareq Aziz was quoted as saying by the official INA news agency. 

 

But Iraqi Oil Minister Amer Rashid said: "We are optimistic and we have absolutely no intention of blocking Iraqi crude exports, currently suspended." 

 

Rashid said Iraq had held talks with UN oil officials on Friday and briefly on Saturday. "We are to meet again on Monday which could result in a solution" for the current blockage, he said. 

 

Baghdad halted on December 1 oil shipments authorized under a UN humanitarian programme through the Turkish port of Ceyhan and Iraq's Gulf terminal at Mina al-Bakr. 

 

Baghdad has pinned the blame for the move, which takes around 2.4 million barrels per day (bpd) off the world market, on the United Nations for rejecting its pricing formula for oil exports in December. 

 

In a bid to get round UN control of all oil export revenues, Baghdad slapped a 50 cent premium on a barrel for December. The United Nations said it amounted to a violation of the sanctions regime as the premium would be paid directly to Baghdad and not to the UN-controlled escrow account for Iraqi oil exports. 

 

However, Iraq also offered at the same time a discount to clients, to compensate for the 50 cent premium, and the United Nations said the formula was below a fair market price. 

 

Rashid described the pricing formula as a "logical request, fair and founded on economic principles", adding it was an "absolute right of the sovereignty of Iraq, which wanted to preserve its riches within the mechanisms of the oil market". 

 

"We are trying to convince the (UN) oil supervisors, who are under clear political pressure" from the United States, the minister said. 

 

The US representative on the sanctions committee made a "stupid" proposal whereby customers continued to lift Iraqi crude in the absence of a price formula, Rashid said. 

 

"Now that is a violation of the norms of exports," he said, adding that Iraq had drawn up its formula after "consulting several of its clients". 

 

Stressing that Iraq was always seeking "stability in the oil market", Rashid held the United States and Britain responsible for the suspension of Iraqi oil exports. 

 

He said Iraq had requested in mid-November a surcharge of 1.50 euros ($1.32), which would have yielded 600 million dollars in the current eighth phase of the oil-for-food programme. 

 

The request was "welcomed with understanding by friendly members of the UN Security Council" but scampered by the United States, he said. 

 

Iraq's Trade Minister Mohammad Mehdi Saleh also defended Baghdad's decision to halt the exports, saying Iraq "could no longer continue its oil exports as the sanctions committee keeps rejecting the new price formula proposed by Baghdad". 

 

The latest showdown comes on the eve of the December 5 expiry of the current phase of the UN oil-for-food programme, which in six-monthly phases authorizes Iraq to export crude in return for imports of essential goods. 

 

"Iraq has still not decided on the ninth (and next) phase of the programme," Saleh told a press conference in Dubai. 

 

He also slammed statements by Saudi Oil Minister Ali al-Nuaimi that the kingdom and other OPEC countries could hike production to meet any shortfall in supply, claiming it was impossible to "make up for the halt in Iraqi crude exports".—AFP. 

©--Agence France Presse.  

© 2000 Mena Report (www.menareport.com)

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