Iraq has indicated it is ready to stop charging an illegal premium on its oil, a top diplomat said Tuesday, June 11, after Iraq's weekly oil exports plunged to one of their lowest levels ever. The office administering the United Nations oil-for-food program said the volume of Iraqi crude sold under UN supervision fell from 15.3 million barrels to 2.6 million barrels last week, reported AFP.
At the same time, revenue slumped from €355 million ($333 million) to an estimated €60 million. The weekly volume was the smallest since the all-time low of 1.6 million barrels in the second week of February last year, apart from periods when Iraq stopped selling oil altogether.
The office of the Iraq program provided no explanation for the slump in sales, but a senior diplomat said it was because Baghdad was still trying to charge buyers an illegal premium of between $0.10 and $0.40 a barrel.
Under sanctions imposed after the Iraqi invasion of Kuwait in August 1990, Iraq is not allowed to receive any revenue from its oil sales. After deductions to compensate Kuwait for war damage and to meet the UN's costs, the revenue goes into an escrow account with the French bank BNP-Paribas and is disbursed directly to Iraq's suppliers to pay for goods approved by the UN under the oil-for-food program.
When Iraq imposed the illegal surcharge last year, as a way to get its hands on cash, the Security Council responded by fixing the price of Iraqi oil retroactively. "This has put the risk entirely onto buyers of Iraqi oil," the diplomat said. He noted that Iraq's exports over the past 12 months have been well below the level of the previous year. In June and July last year, Iraq hit back at the council's decision on pricing by cutting off exports for six weeks.
The office of the oil-for-food program said Tuesday that the program had a funding shortfall of around $2.28 billion and that 926 humanitarian supply contracts that had been approved could not be paid for. "For the first time in many weeks, we had a discussion in the Security Council yesterday about the export situation," the diplomat said.
"The Iraqis sent a message that they were willing to reduce the surcharge to a symbolic level, and it seems that there is a meeting of minds to improve the situation," however, the diplomat added, "We are not there yet; this is just the start of discussions." — (menareport.com)
© 2002 Mena Report (www.menareport.com)
