U.N. oil overseers proposed a compromise over Iraq’s December oil prices to Iraqi state oil marketer SOMO on December 5th in the hopes of ending Baghdad’s five-day oil export stoppage.
SOMO reportedly telephoned the U.N. at noon EST and talked with the overseers for 30 minutes concerning the compromise, after Benon Sevan, head of the U.N. oil-for-food program, had said earlier on December 5th that attempts to contact Iraq to resolve the December crude pricing disagreement had been futile.
SOMO is unlikely to respond to the overseers until after the U.N. Security Council adopts the resolution authorizing the ninth phase of the oil-for-food program.
Iraqi Oil Minister Amer Rasheed had told OPEC Secretary General Rilwanu Lukman that Baghdad was in urgent negotiations with the U.N. and hoped to see a resolution of the pricing dispute in the next day or two, according to the OPEC News Agency earlier on December 5th.
The agency reported that: “The Iraqi oil minister further stressed to Lukman that Iraq was not happy with the situation and that the country would do everything in its power to ensure that it resumed loadings as soon as possible.”
Baghdad halted exports on November 30th after traders refused SOMO’s request for a 50-cent-per-barrel premium to be paid into a separate account outside U.N. control.
The sanctions committee had rejected Baghdad’s proposed selling prices for December on November 27th for being below market value, presumably to accommodate the surcharge.
Iraq’s ambassador to the U.N., Saeed Hasan, said on December 4th that the two sides were between five and 20 cents apart on agreement for the December pricing, but no details of the compromise proposed by the U.N. on December 5th are known.
Hasan also said that no formal proposal has been made to the U.N. regarding the premium and that the issue should not be included in discussions over the December pricing scheme. Rasheed had said on December 3rd that: “We didn’t stop exporting oil and we have no desire to halt exports, but the American and British pressure stopped customers from liftings at our terminals.”