Markets stay calms despite Iraqi oil halt

LONDON — Oil prices have remained stable amid the Iraqi suspension of oil exports.

Oil markets in London and New York succeeded in staying calm on Friday as reports arrived that Baghdad was making good on its threat to halt oil exports. Analysts said Saudi Arabia will make up for any short-term shortage in supply.

In Washington, U.S. Energy Secretary Bill Richardson said the United States would be prepared to draw from its strategic petroleum reserve to prevent a crunch in supplies.

The Iraqi move — which ended crude oil shipments to the Turkish port of Ceyhan and the Iraqi Gulf port of Mina Al Bakr — comes ahead of a dialogue with the United Nations next month to end the sanctions imposed more than 10 years ago. The sanctions include UN supervision of Iraqi oil exports, a program that expires on Tuesday.

Iraqi officials said the halt in oil exports began on Friday. They said the suspension was in protest of the UN rejection of an Iraqi demand for customers to pay a 50 cent surcharge per barrel.

"Iraq is determined not to abandon its rights," the Iraqi Oil Ministry said.

Iraq, which has exported 2.3 million barrels of oil per day, is believed to have prepared well for any fuel stoppage. Analysts said Iraq has nearly $12 billion in escrow accounts and billions of more dollars in revenue from oil smuggling.

Baghdad has also renewed operations of a pipeline to Syria, which would not fall under UN supervision. The renewal of operations has been confirmed by Western diplomats.

"We were discussing with the Syrians the need to have that mode of oil transfer come under the UN jurisdiction, to be approved by the sanctions committee," U.S. State Department Philip Reeker said on Friday.

The UN is trying to resolve the crisis. UN secretary-general Kofi Annan has called for a resolution of hundreds of Iraqi applications for import approval. The United States and Britain have held up more than $2.3 billion in Iraqi import orders out of concern that the items could be used in Baghdad's military programs.

Annan said about a third of the suspended orders involve incomplete information regarding the imports and their purpose. He said the applications would have to be resubmitted before they could be processed.