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UN Secretary General's spokesman Fred Eckhard
"An agreement was reached on a mechanism for the pricing of Iraqi oil "
 real 28k

Friday, 8 December, 2000, 22:47 GMT
UN and Iraq end oil price row
Iraqi oil workers
The question is - will Iraq now resume its oil exports?
By Mark Devenport at the United Nations

The United Nations has agreed a new price for Iraqi oil for this month, resolving a disagreement over the price originally submitted by Baghdad.

Oil industry analysts are now watching closely to see if the agreement leads Iraq to resume its oil exports which it suspended eight days ago.

The UN originally refused to accept pricing proposals submitted by the Iraq state oil company because it regarded them as too low.

The belief was that Baghdad was discounting the cost of its oil in order to encourage its customers to pay a 50-cents surcharge which it wanted to levy on every barrel of oil it sold.

Breach suspected

The UN regarded the surcharge as in breach of its sanctions regime.

The UN Security Council
The Security Council must approve the new price before it is revealed
This is because Baghdad wanted to keep the money itself rather than channelling it through the UN programme intended to provide funds for food and other humanitarian supplies.

The new price agreed by the UN's oil overseers and Iraq will not be revealed until it is approved by a committee of the UN Security Council.

But it is understood to be lower than the November price.

This reflects the current state of the world market and the loss of confidence in Iraq as a supplier caused by the disruption of the past week.

Oil analysts will now be watching carefully to see if this is a step towards normalisation.

They are also wondering whether the agreement will convince Baghdad to drop its demand for a surcharge and to resume its oil supplies at more than 2bn barrels a day.

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See also:

06 Dec 00 | Middle East
UN extends Iraq oil regime
03 Dec 00 | Middle East
Iraq sticks to oil price formula
01 Dec 00 | Business
Oil: The Iraq factor
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