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Saudi To Fill In Oil Production Void From Iraqi Freeze
CAIRO (IslamOnline) - Saudi Arabia, the world’s largest oil producer, said Monday it would step in to fill in a void in oil production created Friday by Iraq’s decision to freeze its oil exports until a row with the United Nations over pricing policy is resolved, news agencies reported.
News agencies quoted a Saudi oil ministry official as saying that his country, an OPEC powerhouse, would act in concert with other oil producers in compensating for the lost oil amounts on the world’s markets.
“Saudi Arabia, in coordination with other producers, will definitely fill the gap left by the suspension of Iraqi oil exports,” a Saudi source said. “But the timing is not yet definite.”
Saudi Oil Minister Ali al-Neimi said on Saturday that his country was consulting with the International Energy Agency and end-consumers over a proper course of action. “These consultations will crystallize into a practical and clear-cut position that would guarantee stability in the market,” Neimi said.
Neimi said OPEC countries could produce up to 2.5 million bpd over current production rates, of which the Arab kingdom can produce at least 70%. Iraq share is estimated at 2.5 million bpd.
Iraq stopped its oil exports on Friday after the oil-rich country failed to reach an agreement with the United Nations over a new pricing policy. Baghdad wants to impose a $0.50 surcharge on every barrel it exports with the revenues going into a special fund that will not be monitored by the U.N.
Under the Iraq-U.N. Oil-for-Food program, revenues from Iraqi oil exports go into a New York escrow account where the U.N. sanctions committee can monitor the money’s use. Part of the fund is used to pay reparations for Iraq’s 1990 invasion of Kuwait.
On Sunday, Iraqi Oil Minister Amer Mohammed Rashid blamed the United States for putting pressure on U.N. officials to reject the Iraqi plan and deprive the Iraqi people of a possible source for extra revenues.
Iraq says the Oil-for-Food program was failure, as it has not fulfilled its purpose. “We have exported more than $38 billion,” said Rashid. “Only $8.5 billion worth of contracts have arrived,” he said.
“About $3.5 billion worth of contracts are on hold while there is $14-$15 billion frozen in banks.”
Baghdad says it wants the extra money to help its citizens bear the effects of ten-year-old U.N. sanctions that have left many Iraqis starving and suffering.
In spite of the news from Riyadh, Iraqi officials said Monday that they would still stand by the proposed pricing policy but were hopeful that the crisis would be diffused soon.
Kuwait, Saudi Arabia and the United Arab Emirates are the only OPEC members that can bring in extra oil exports into an already nervous market that has seen prices hovering over $30 per barrel.
Kuwaiti Oil Miniser Eheikh Saud Nasser al-Sabah, whose country produces 2.14 million barrels a day, warned against putting a glut into the market right now as it was “saturated in the time being and there’s no need to boost production to compensate for Iraq’s quota.”
International oil analysts said Iraq’s resistance would tumble soon as the current high oil prices meant that Baghdad would be missing out on a handsome amount of cash, in spite of its complaints about U.N. monitoring its use of money.
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