Iraq May Halt Oil Exports for Political ReasonIraq is likely to suspend oil exports worth 5 percent of world crude exports from November 1, if Washington objects to a plan by Baghdad that it be paid in euros rather than in dollars, an Iraqi source said."Iraq is unlikely to implement oil contracts if the United states objects to euro payment for Iraqi oil and Baghdad insists payment be made in euro," the source said, quoted by Dubai-based "Gulf News" newspaper on Friday. "I see a problem," he added, "this is a political issue and not a technical matter." Meanwhile, he indicated that any suspension would be from November 1. Iraq was the sixth biggest oil supplier to the United States in August, providing 749,000 barrels per day (bpd), U.S. government figures show. Its U.N.-monitored sales account for 5 percent of world oil exports of about 450 million bpd. Baghdad decided in late September to stop "trading, selling and purchasing with the dollar" and replace it with the euro or any other currency. Requiring crude payments in euro appears to be the first step in this direction. However, in the event of any Iraqi shortfall, the world's largest oil exporter, Saudi Arab would increase its exports. Saudi has said it can increase its current output of 8.5 million bpd by 2 million bpd and that it could take up to 90 days to attain maximum production levels. The source said the timing of any extra Saudi oil would not be decided until it was clear whether Iraq was actually suspending sales, adding that the Organization of Petroleum Exporting Countries was also preparing to fulfil the terms of its price stability mechanism to release another 500,000 bpd. The mechanism stipulates extra supply when the price of OPEC's basket of crudes stays over 28 U.S. dollars for 20 days, a target likely to be breached. |
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