Iraq continued to defend its December crude prices on November 29th, prompting much speculation that Baghdad’s oil exports could be halted beginning December 1st.
The UN sanctions committee rejected Iraq’s December crude prices on November 27th on the grounds that they were below market value, presumably to accommodate the 50-cent premium that Iraqi state oil marketer SOMO intends to require its customers to pay into a separate account outside UN control from December 1st.
The current price formula is set to expire on November 30th, and a new pricing scheme must be approved by December 1st for liftings under the oil-for-food program to continue uninterrupted.
Iraqi Oil Minister Amer Rasheed said on November 28th that Baghdad would stick to its submitted December prices, but did not intend to halt oil sales. Rasheed said that: “We will continue to defend and defend until we are victorious against those who have unjust responses to our demands.” However, he added that: “We have no intention of interrupting any supplies.”
Iraq has reportedly cancelled some December shipments after its customers refused Baghdad’s request for the premium to be paid into a direct account in violation of sanctions.
Other traders have said that liftings scheduled for November have been pushed back until December, forcing the customers to pay the 50-cent surcharge. Some customers that had pending December liftings and attempted to reschedule them for November were refused by SOMO as well.