August 18, 2002	Sunday	Jamadi-us-Saani 8, 1423

NICOSIA, Aug 17: Iraq has stopped levying on certain clients a surcharge which prompted a freefall in sales in recent weeks, the Middle East Economic Survey (MEES) says in its Monday edition.

Baghdad’s State Oil Marketing Organisation has lifted the illegal surcharge on at least six cargoes sold to Russian firms and traders in the past 10 days, the Cyprus-based weekly says, quoting industry sources.

However other buyers are still paying the 15-cent surcharge and having difficulty re-selling to third parties, MEES adds.

Iraq’s UN-supervised oil exports plunged to 4.4 million barrels per day (bpd) in the week ending August 9, or about half the figure of the previous week.

The executive director of the United Nations’ Iraq programme, Benon Sevan, warned the Security Council on August 6 that the drop in crude exports threatened to have serious consequences on the humanitarian situation.

The sharp decline in exports led Iraq’s State Oil Marketing Organization (SOMO) last month to reduce the premium on oil exports to 15 US cents a barrel from 30 cents for exports to the United States and 25 cents for Europe.

Last year, Britain and the United States forced a tougher pricing policy on the Security Council’s sanctions committee in response to the surcharges.

The price, which was previously determined at the start of each month by the oil overseers in consultation with the Iraqi oil ministry, is now set retroactively by the committee.

Under sanctions imposed on Iraq for invading Kuwait in 1990, Baghdad is not allowed to receive the revenue from its oil sales, which goes into an escrow account and is disbursed directly to suppliers of goods approved under the UN oil-for-food programme.—AFP