Iraq temporarily disrupted oil loadings at the Turkish port of Ceyhan on November 7th in protest of the U.N.’s failure to comply with a deadline to process oil payments in Euros instead of dollars.
A U.N. source said that the suspension would continue for 12 to 24 hours and that Iraq would resume exports once the U.N. established a mechanism to receive payments in Euros.
On November 6th, the U.N. opened a bank account in Euros in New York to allow oil lifters to pay in the new currency, but a standard letter of credit in Euros was not established until November 7th, completing the mechanism.
A shipping industry source indicated that exports from the Gulf port of Mina al-Bakr had not been stopped. Baghdad had said on October 30th that a November 1st deadline for the change from dollars to Euros had been extended to November 7th to allow the U.N. to make the necessary arrangements, after the U.N. sanctions committee approved Iraq’s proposal to switch from the dollar to the Euro on October 30th.
Iraqi crude production averages 2.3 million b/d, and Baghad exports about 40 percent of its crude through Ceyhan, with the remaining 60 percent going through Mina al-Bakr.
Exports from Ceyhan make up 1.3 percent of world consumption of 75 million b/d of oil, while Iraq’s exports to the U.S. average between 700,000 and 800,000 b/d. Industry insiders found the timing of the suspension, coinciding with the U.S. presidential election, to be rather questionable.