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UN Panel Says Iraq's Oil Prices Too Low
A sanctions committee of the UN Security Council rejected November 27 as too low Iraq's proposed oil prices for December, leading to fears that Baghdad's exports may be delayed next week, diplomats said here.
Iraq proposed the lower selling prices for its crude oil grades so it could include a 50-cent per-barrel surcharge outside the UN program and still keep its oil competitive, oil industry analysts said.
But the sanctions committee agreed with an assessment last week by the UN oil experts that the prices Baghdad submitted for December exports were too low, the diplomats said.
Iraq submits its pricing each month for UN approval. If no new formula is submitted and approved by Friday this week, Iraq could halt its oil exports.
In October, however, Iraq continued oil flows even though its pricing formula was approved after the first of the month.
Baghdad has been pressing the United Nations and buyers for a surcharge of 50 cents a barrel it wants paid into an Iraqi-controlled bank account. The lower prices were assumed to be an attempt to compensate buyers of crude.
Under the humanitarian or oil-for-food program, Iraq can sell as much as crude as it likes, with oil customers paying into a tightly controlled U.N. escrow account.
The revenue is used to purchase food, medicine and other supplies to alleviate the impact of the sweeping sanctions imposed when Baghdad's troops invaded Kuwait in August 1990.
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