Iraq crude boycott targets U.S. oil import reliance

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Iraq crude boycott targets U.S. oil import reliance New York | Reuters | 05/12/00

Iraq's decision to impose a crude oil export boycott on the U.S. comes at a time when America's refiners have become more dependent on Baghdad's oil than ever before.

U.S. thirst for Iraqi crude has doubled in the past two years to some 750,000 barrels daily (bpd) - nine per cent of total U.S. oil imports - with No 1 U.S. oil firm Exxon Mobil, the No 2 Chevron and independent refiner Premcor leading the way.

Other purchasers Iraqi oil for their U.S. refineries include major BP and other leading independent refiners Koch Petroleum, Valero and Tosco. While U.S. oil companies do not have official contracts to buy Iraqi oil under the Opec producer's oil-for-food programme with the UN, they can import quite legally through oil trading middlemen.

The imports were threatened at the weekend when Iraq said it would boycott companies and countries that sold its crude oil to countries it regards as hostile. "Any company found supplying Iraqi crude to a country in a state of war with Iraq will be put on the blacklist and there will be a partial or full ban in dealing with it," said Iraqi Trade Minister Mohammed Mehdi Saleh.

Although the statement did not name countries Baghdad considered hostile, it was clearly referring mainly to the United States, which led the 1991 Gulf War against Iraq. At a time when U.S. winter stocks of crude and refined products are already running low, the threats may scare some companies from importing crude, according to some buyers of Iraqi crude.

"People are not buying Iraq crude because they are not going to run the risk of getting into trouble," said one oil trader. Iraq's move highlights the growing U.S. dependence on imported oil, as robust demand at home pulls away from declining domestic production.

Baghdad's penetration of the U.S. oil market has now surpassed pre-Gulf War levels, when exports were averaging around 500,000 bpd, Department of Energy figures show. In recent months, ExxonMobil has been taking in nearly 200,000 bpd, while Premcor has been importing 130,000 bpd.

Yet the oil market's muted response to Iraq's recent stoppage to all its crude exports has suggested that importers may not be as vulnerable to a disruption in Iraqi supply as has been feared, analysts say.

Crude prices have slid more than $2.50 a barrel since the Iraqis halted oil exports Friday over a pricing row with the UN. Traders say that lofty prices of above $31 have already taken into account the threat that Iraq could disrupt its exports ahead of winter.

"Saddam Hussein's gambit appears to have failed rather miserably," said Peter Beutel of Cameron Hanover in Connecticut. Traders say Iraq's refusal to sell to the United States could see more of its crude heading to the Far East, displacing oil from other Gulf sources such as Saudi Arabia.

Saudi Arabia, the only Opec nation with significant production capacity, has vowed to fill any disruption from Iraq, a Saudi source told Reuters yesterday. "As long as overall world supply doesn't change, it's not going to be too big an issue," said a Premcor spokeswoman. "We assume it's just going to move some barrels around."

In addition, the United States reiterated yesterday that it was ready to dip into its own strategic crude reserves to counter an Iraqi supply disruption. "We are ready to take action to add supply very quickly if the situation should warrant," State Department spokesman Richard Boucher told reporters.

Still, some traders question whether Iraq will be able to carry out its threats. "Where does Iraq think its oil is going to go if it doesn't go to the U.S.?" asked one trader with a U.S. major oil company.

http://www.gulf-news.com/Articles/print.asp?ArticleID=4174

-- Martin Thompson (mthom1927@aol.com), December 05, 2000

Answers

Tuesday 5 December 2000

Iraq has not resumed oil exports: Industry sources

LONDON: Iraq has not resumed crude oil exports from its outlets at Ceyhan terminal and Mina al-Bakr in the Gulf in its latest dispute with the United Nations over pricing, reliable industry sources said on Monday.

The sources said Iraq was again piping oil to Ceyhan in Turkey but there were no signs that Baghdad was resuming its crude exports.

It was not clear whether the pipeline which closed on Friday was running at full capacity. Ceyhan terminal has several million barrels of storage capacity and the pipeline normally runs at 900,000 barrels a day.

Iraqi crude exports ground to a halt on Friday after Baghdad insisted that buyers of its crude pay a surcharge outside the terms of the United Nations oil-for-food programme. (Reuters)

http://www.timesofindia.com/051200/05inte5.htm

-- Martin Thompson (mthom1927@aol.com), December 05, 2000.


Moderation questions? read the FAQ