Oil prices were flat in morning trading in London on Thursday, despite signs that the stand-off between Iraq and the United Nations was coming to a head.
A barrel of benchmark Brent crude for delivery in January was unchanged at 32.68 dollars by midday.
Prices nudged up briefly in early trading, but later fell back despite concerns that Iraq would shut down its export pipeline in the coming days unless it brokers a deal with the United Nations on oil pricing formulas, analysts said.
Iraq is understood to have demanded that an extra 50 cents per barrel be paid for its oil by customers into an account outside of UN control, a pricing formula that UN officials rejected on Tuesday.
GNI analyst Lawrence Eagles said that the situation could come to a head by the end of the week unless either Iraq or the United Nations backs down.
Unless Iraq submits new pricing formulas on Thursday, or the United Nations allows exports to continue in the absence of an agreed formula or accepts Iraq's own formula, "then you are not going to have exports from Iraq from tomorrow", he said.
Iraq exports about 2.3 million barrels a day, which represents vital volume for a tight market. Saudi Arabia has pledged to step in and boost its own output if Baghdad turns off its export taps, but analysts doubt it could plug the Iraqi hole.
Iraq was already beginning to disrupt its exports by postponing November shipments into December, Eagles said.
"Clearly Iraq is stifling oil exports but the myriad of excuses for the lack of loadings suggests that it does not want to formally indicate that it has stopped loadings -- it wants the UN to shoulder the blame."
With such supply concerns putting investors on edge, new forecasts of return to colder weather in the US Northeast by the weekend provided little comfort to a market starved of crude – LONDON (AFP)
© 2000 Al Bawaba (www.albawaba.com)
