Market concern has Iraq stop exports

Published December 3rd, 2000 - 02:00 GMT

News Agencies reported that Export-Stopping Deadlock of Iraq oil continues. Iraq's State Oil company informed the United Nations on Friday that stands by its proposed oil prices for December, which were rejected earlier this week as below market value, U.N. officials said.  

 

Iraq has halted all its 2.4 million barrels per day oil exports as a dispute with the United Nations, and raising fears of a possible oil shortage during the winter.  

 

Iraq has stopped all loading of tankers at the Persian Gulf in its Gulf oil export terminal of Mina al-Bakr and halted pumping via its trans-Turkey pipelines Thursday night, according to the U.N. and the Turkish pipeline agency Botas. 

 

The suspension of exports removes about 2.4 million barrels per day-- some 3 percent of global supply--from the market, at a time of historically low stocks and high prices. the U.N. Agency said. 

 

U.S. Energy Secretary Bill Richardson said the United States was "not terribly concerned" about the Iraqi threat, noting that Gulf oil-exporting states, including Saudi Arabia, would make up the shortfall if Iraq reduced shipments. 

 

But industry analysts have raise doubts that the Saudis can come up that amount of extra oil that fast, they are concerns that the Saudis can only capable of adding 600,000-900,000 barrels per day in the short term.  

 

They said it could take 90 days to start up the full 1.8 million barrels per day. And many crude trading sources said 90 days would be too long to wait to ease market demand.  

 

The extra oil would not reach U.S. refineries until May or June, when winter is over. It would reach refiners closer to Iraq only a little sooner, and Venezuela that may pump that extra production capacity, has the constrains that the market is already well-supplied with the heavy crude oil Venezuela produces. 

 

In an attempt to get more control of the income from its oil sales, Iraq's State Oil Marketing Organization (SOMO) is demanding that its customers pay 50 cents per barrel into a non-U.N.-administered account.  

 

The U.N. allows Iraq to sell oil to buy food and other essential goods, but the sale proceeds must be channeled through the U.N. Payments to the separate account would violate economic sanctions imposed against Iraq after the Persian Gulf war in 1990 and 1991. 

 

In a midnight telephone call from Baghdad, SOMO officials told the U.N. Oil Overseers that the "feel they are right" about their proposed December prices and that they have no intention at present to change them, officials familiar with the conversation said, reported Dow Jones News Wires. 

 

Asian buyers have already been forced to turn to other Gulf exporters to fill their immediate requirements for crude oil.  

 

"We're hoping they will sort it out in the next few days," said a source at one company scheduled to load Iraqi oil in the next few days from Mina al-Bakr, reported Bridge News 

(petroleumworld)  

By Elio Ohep  

 

© 2000 Mena Report (www.menareport.com)

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