Iraq on Saturday announced a halt in oil exports from June 4, tossing out the UN's extension of an oil-for-food program as it battles to head off British and US proposals for "smart" sanctions.
"Iraq has decided to stop its crude exports from ports in the Gulf and the Mediterranean from 8 a.m. (0400 GMT) Monday, June 4, and until further notice," an oil ministry spokesman said, quoted by the official news agency INA, cited by AFP.
The timing coincides with the end of the current phase of the UN oil-for-food deal and will wipe around 2.2 million barrels per day off the world oil market.
Ahead of an OPEC meeting in Vienna next week, Saudi Arabia stepped in swiftly after the Iraqi announcement with an offer to compensate for any shortfall on the world market, said the agency.
Iraq's exports under the oil-for-food deal pass through Turkey's Mediterranean port of Ceyhan and Mina al-Bakr terminal in the northern Gulf.
Saudi Oil Minister Ali al-Nuaimi said Saturday his country was “ready to compensate for any shortfall on the world market after Iraq announced a halt in oil exports from June 4.”
"Saudi Arabia is prepared, along with OPEC members and other large crude producer countries, to make up for the shortfall that Iraq will cause if it implements its decision to halt crude exports," he told reporters in Riyadh, quoted by AFP.
He said the Saudi kingdom, the world's largest oil producer and exporter as well as OPEC linchpin, was committed to "market stability, a balance between supply and demand, and the stability of crude prices".
Under the latest quotas set by OPEC, which is scheduled to meet next week in Vienna, Saudi Arabia's production stands at 7.865 million bpd.
Iraq's decision to cut exports came a day after the UN Security Council extended the program by one month to give the 15-member organization time to reform the 11-year-old sanctions regime against Baghdad.
Iraq had warned it would reject an extension rather than a regular six-month term of the program, which allows Baghdad to export crude under UN supervision to finance imports of humanitarian goods.
The suspension was decided because the Security Council had failed "to respect, in spirit or in letter," a memorandum of understanding which launched the program in December 1996, an oil ministry spokesman said, quoted by INA.
On Friday, Iraq's Deputy Prime Minister Tareq Aziz summoned the ambassadors of Russia, China and Tunisia on Friday, informing them of Baghdad's rejection of the United Nations' one-month extension to the oil-for-food program, reported the Associated Press.
The full 15-member UN Security Council on Thursday agreed to extend the program to give council members more time to study a British "smart sanctions" proposal.
The extension was expected to be adopted Friday.
Aziz told the ambassadors that adopting the extension "will not inflict damage on Iraq alone, but also on its Arab and friendly partners."
The extension was based on parts of the "smart sanctions" proposal which Iraq has already rejected, he said, cited by the AP.
Russia and China are among the five veto-wielding permanent members on the Security Council, while Tunisia occupies a non-permanent seat in the Council.
The council gave final approval Friday to a resolution that would extend the current oil-for-food program, due to expire June 4, through early July so members can hash out their differences over a US-British proposal to overhaul the Iraq sanctions - Albawaba.com
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