Oil Prices Surge as Iraq Threatens to Halt Exports
Thursday, October 26, 2000 10:28 AM ET
NEW YORK -- Oil prices surged Thursday morning as Iraq threatened to halt its exports.
Shortly after 10:15 at the New York Mercantile Exchange, December crude was up 49 cents, or 1.5%, to $33.45 a barrel. January crude added 42 cents, or 1.3%, to $32.61 a barrel.
November gasoline gained 0.91 cent to 99.9 cents a gallon. November heating oil rose 0.88 cent to 98.6 cents a gallon.
Earlier this month, Iraq said it would no longer accept U.S. dollars for its oil exports effective Nov. 1 and asked the United Nations, which oversees its exports, to set up an account where customers could pay for Iraqi oil in euros. The U.N. hasn't acted on Baghdad's request, and Iraq, which calls the dollar a currency of an "enemy state," repeated it would halt exports if a euro account for its oil revenue isn't set up.
The U.N. Sanctions Committee, which maintains strict control of Iraqi oil revenue, is scheduled to meet Monday to make a decision.
The Middle East Economic Survey, an industry journal, reported that there is a "real possibility" that Iraqi oil exports will be suspended next week, saying that it would take the U.N. two months to act on Iraq's request.
Because the sanctions committee has yet to agree on the issue, Iraq hasn't submitted its proposed prices for November oil exports. Without approved prices, Iraq won't be able to export oil under the U.N. oil-for-food program.
An interruption in Iraqi oil exports would have a sharp impact on oil prices at a time when global oil inventories are extremely low, analysts said.
"I think the threat is real," said Tom Bentz, an analyst at BNP Paribas Futures, Inc. in New York. "The Iraqis are trying to find a reason to do what they can to disrupt the oil market."
In recent weeks, Iraq has produced an average of 2.2 million barrels of oil a day. It is feared that if Baghdad halts exports, other producers, who already are producing at or near capacity, wouldn't be able to make up the difference.
Saudi Arabia, the world's largest oil producer and exporter, has said it would move in to fill any shortage of oil caused by an Iraqi interruption. Saudi Arabia, which currently produces about nine million barrels a day of oil, has additional capacity of about 1.5 million barrels a day.
Western government officials have said that they would release oil from their emergency reserves if Iraq halts exports.
But analysts doubt it would be enough.
Thursday, October 26, 2000 10:28 AM ET
NEW YORK -- Oil prices surged Thursday morning as Iraq threatened to halt its exports.
Shortly after 10:15 at the New York Mercantile Exchange, December crude was up 49 cents, or 1.5%, to $33.45 a barrel. January crude added 42 cents, or 1.3%, to $32.61 a barrel.
November gasoline gained 0.91 cent to 99.9 cents a gallon. November heating oil rose 0.88 cent to 98.6 cents a gallon.
Earlier this month, Iraq said it would no longer accept U.S. dollars for its oil exports effective Nov. 1 and asked the United Nations, which oversees its exports, to set up an account where customers could pay for Iraqi oil in euros. The U.N. hasn't acted on Baghdad's request, and Iraq, which calls the dollar a currency of an "enemy state," repeated it would halt exports if a euro account for its oil revenue isn't set up.
The U.N. Sanctions Committee, which maintains strict control of Iraqi oil revenue, is scheduled to meet Monday to make a decision.
The Middle East Economic Survey, an industry journal, reported that there is a "real possibility" that Iraqi oil exports will be suspended next week, saying that it would take the U.N. two months to act on Iraq's request.
Because the sanctions committee has yet to agree on the issue, Iraq hasn't submitted its proposed prices for November oil exports. Without approved prices, Iraq won't be able to export oil under the U.N. oil-for-food program.
An interruption in Iraqi oil exports would have a sharp impact on oil prices at a time when global oil inventories are extremely low, analysts said.
"I think the threat is real," said Tom Bentz, an analyst at BNP Paribas Futures, Inc. in New York. "The Iraqis are trying to find a reason to do what they can to disrupt the oil market."
In recent weeks, Iraq has produced an average of 2.2 million barrels of oil a day. It is feared that if Baghdad halts exports, other producers, who already are producing at or near capacity, wouldn't be able to make up the difference.
Saudi Arabia, the world's largest oil producer and exporter, has said it would move in to fill any shortage of oil caused by an Iraqi interruption. Saudi Arabia, which currently produces about nine million barrels a day of oil, has additional capacity of about 1.5 million barrels a day.
Western government officials have said that they would release oil from their emergency reserves if Iraq halts exports.
But analysts doubt it would be enough.
