BAGHDAD, Iraq (AP) — Iraq has decided against raising its December crude oil prices because an increase would make its crude oil "noncompetitive," the official Iraqi News Agency quoted an Oil Ministry spokesman as saying Friday.
Iraq's decision came a day after the U.N. sanctions committee said oil companies can continue loading Iraqi crude onto tankers beyond Friday but cannot pay for it until Iraq proposes prices for December that are in line with fair market value.
The U.N. committee's decision left oil companies uncertain about whether to continue to fill their tankers after the start of the new month without knowing when they may be able to sell the oil on the market.
"Iraq is concerned about its wealth and the interest of its people, and whether the oil is Iraqi or of other nationalities it should be related to the market and subjected to its conditions," said the unidentified Oil Ministry spokesman. "Therefore raising the prices of Iraq's oil makes it noncompetitive."
The spokesman told INA that raising the price of Iraqi crude would deter buyers, and said any negative effects from not increasing the price will be blamed on the Americans and Britons in the committee.
Iraq has been under sanctions since 1990 and needs the sanctions committee to approve its proposed prices to export oil each month. Last week, Iraq submitted prices that U.N. oil experts determined were too low — and the committee rejected them.
"The Iraqi Oil Ministry calls for a dialogue with the buyers and we hope to make them understand the facts ... otherwise Iraq is determined not to relinquish its rights," said the Oil Ministry spokesman.
Iraq's low price offer was believed to be an attempt to compensate buyers for a surcharge of 50 cents a barrel which Iraq wants them to pay into an Iraqi-controlled account. Companies appeared to be unwilling to pay the surcharge since it would be a violation of the U.N. sanctions, imposed 10 years ago following Iraq's invasion of Kuwait.
Since then, Iraq has not been allowed to sell its oil on the open market. The U.N. oil-for-food program, launched in 1996, allows Iraq to sell its oil on the market provided the proceeds are used to buy food and medicine for its people suffering under sanctions.
Iraq's pricing tactics were the latest evidence of its increasing efforts to wrest control of its valuable oil revenues while also chipping away at support for the decade-old sanctions.
In October, Iraq successfully campaigned to be paid for its crude in euros rather than American dollars and it has requested to have 1.5 euros per barrel set aside to pay Oil Ministry employees and to maintain oil-related facilities inside the country.