The United Nations has approved Iraq's pricing formula for oil exports, removing the last legal hurdle for Baghdad to start trading under the oil-for-food plan.

Amir Rasheed: oil has begun to flow

The Iraqi Oil Minister, Amir Muhammed Rasheed, said Iraq was able to pump more than 800,000 barrels per day. Iraq had already started pumping oil to a terminal in southern Turkey, but sales are not expected to start until next week.

The BBC Economics correspondent says Iraqi oil exports come at a time when prices have fallen by 25%.

Oil for food deal

Under the deal with the UN, Iraq is allowed to export $2bn worth of oil over six months in order to buy humanitarian supplies to ease the impact of UN sanctions, imposed after Iraq invaded Kuwait.

Iraq suspended the oil exports early in December to protest against delays in delivering the supplies.

The new distribution plan was agreed last month and approved by the UN Secretary-General, Kofi Annan.

A UN condition requires the first billion dollars of sales to be completed by early March.

Despite the easing of the oil embargo, the UN reported in December that the amount of oil which Iraq can sell is insufficient to guarantee an acceptable standard of nutrition for the country's 22m people.

The UN Security Council will only lift the embargo on all Iraqi oil sales it is satisfied that Baghdad has destroyed its nuclear, chemical and biological weapons and all missiles with a range greater than 100 km.

UN inspectors have accused Iraq of failing to disclose all details of its illegal weapons programs and of hindering inspections.
 

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