CAIRO, 19 March 2003 — Foreign oil companies have stopped buying Iraqi crude after the United Nations suspended its “oil-for-food” program, oil traders said yesterday.
Traders contacted in London said companies were not buying Iraqi oil because the contracts could no longer be financed through the UN-supervised humanitarian program.
A shipping source in the region also said that lifting of Iraqi oil already stopped from Iraq’s terminal of Mina al-Bakr on the Gulf last weekend. “Insurance doesn’t cover war,” he said.
Mina Al-Bakr and the Turkish port of Ceyhan are the two points of exports of Iraqi oil under the humanitarian program launched in 1996 to ease the impact on Iraq’s civilians of the embargo slapped on Iraq in 1990 for invading Kuwait.
“After the last tanker loaded and left Mina Al-Bakr, two others were supposed to lift this week but insurance companies decided they won’t have the time to load and sail out in time before the military offensive start so they canceled them,” the shipping source said.
“It’s continuing for the moment at Ceyhan, because of past contracts and Iraqi oil already stored there, but this is also expected to stop the moment the offensive starts,” he added. Traders said however that Iraq’s exports by road to Jordan and through a pipeline to Syria, which are not supervised by the United Nations, were apparently continuing.
An oil expert said the United States would be the first to suffer from the halt in Iraqi exports because it is the biggest buyer, taking about two-thirds of Iraq’s sales last month. However, the market is well supplied by other sources, he said.
Iraqi Trade Minister Mohammad Mahdi Saleh said Monday that Baghdad has not yet decided to halt oil production, although UN Secretary General Kofi Annan said the humanitarian program had to be suspended because the UN staff tasked to oversee it had to pull out of the country because of the looming US-led war.
The last UN staff left in Iraq were being pulled out yesterday.
Iraq currently has an output capacity of some 2.8 million barrels per day (bpd), of which some two million bpd can be exported. But Iraqi sales have been dwindling over the past few months with companies turning away due to war fears.
