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Friday, 1 December, 2000, 09:52 GMT
Iraq halts oil exports
Crude oil prices rose in early trading on Friday after shipping industry sources said Iraq had halted its oil exports.
The move was the latest sign of a deepening dispute between the Gulf producer and the United Nations.
The sources said no crude had been loaded at Turkey's Ceyhan port or the Gulf's Mina al-Bakr since late on Thursday.
The world benchmark Brent blend for January delivery was up four cents at $31.92 a barrel in early trading in London on Friday.
The previous day it had closed sharply lower as speculation that Iraq may not cut supplies faded.
The US had earlier said it and its allies would take swift remedial action if Iraq halted oil exports.
Energy Secretary Bill Richardson said Washington was ready to release more oil from its strategic petroleum reserve, and would do so quickly if needed.
The UN says the surcharge Iraq requested would be illegal because it would break Gulf War sanctions that require all income from oil
"The US is prepared to respond to Iraq if they take these steps," US Energy Secretary Bill Richardson had said. "We have good, fast contingency plans."
He added that several oil-exporting countries in the Middle East, including Saudi Arabia, had pledged to compensate for any shortfall.
World markets reacted nervously to the threat. Iraq has the second largest oil reserves of any country.
Correspondents say a halt to its estimated output of 2.4 million barrels a day could stop any decline in international crude prices.
Tankers turn away
The UN says Iraq's proposed oil price does not reflect a fair market value.
It says Iraq's customers should continue loading crude, but pay for it later.
"Loadings of oil can continue without a pricing mechanism, but until there are UN-approved prices, no payments can be made for the oil lifted," UN spokesman Fred Eckhard said.
By Thursday, however, many ships that had been queuing for Iraqi oil at outlets in the Gulf and Turkey had turned away.
Reports say the already high level of oil prices has boosted Iraq's funds for purchases of food and medicine to about $11bn, enabling Baghdad to sustain a halt in oil sales for some time.
Iraq has been growing steadily more confident in recent months amid widening cracks in the sanctions regime.
Earlier on Thursday, Baghdad again rejected new weapons inspection proposals.
Deputy Prime Minister Tariq Aziz responded with a blunt "No" when asked whether Baghdad would accept a mission under recently-appointed chief inspector Hans Blix.
His remarks came a day after UN Secretary-General Kofi Annan said he planned to start talks with Iraqi officials early next year aimed at breaking the deadlock over weapons inspections.
Inspectors have not been allowed into Iraq since the US and the UK launched air raids on Baghdad nearly two years ago.
The UN says sanctions imposed on Iraq after its invasion of Kuwait in 1990 will only by lifted when inspectors have verified that Iraq no longer maintains alleged weapons of mass destruction.