Iraq Halted Oil Exports

As Iraq stopped the crude oil exports from the morning of 4th, it is forecasted that the discontinuation of oil exports will have severe impact on the international oil market.

France-Presse (AFP) reported that ``crude oil exports stopped at 8:00 am (0400 GMT),`` a source at the oil ministry said.

According to the Iraq`s decision to stop oil exports, the price of hard oil increased 44 cents to $ 28.37 a barrel yesterday in the Asian crude oil forward market.

Amir Muhammad Rashid, Iraqi Oil Minister threatened that ``we will halt oil exports at least for a month from 4th, in defiance of the U.N. Security Council`s decision to extend the oil-for-food program that governs the Iraqi oil exports for a month instead of approving a typical six-month renewal.`` But Iraq declared to export oil to Turkey and Jordan through an overland route.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) plans to review the impact of Iraq`s halting of oil exports and to discuss the countermeasure in order to maintain the stable price such as the increase of oil production in a general meeting for two days from 5th at Vienna, Austria.

The OPEC member countries agreed not to increase oil production before the general meeting, but they are likely to make a concession with the increase of oil production due to the Iraq`s decision to cut oil exports. The OPEC president Chakib Khelil (photo) told at Vienna on 3rd that `` we`re going to increase oil production to make sure that demand is met.``

The oil experts anticipated that the standard oil price to decide the increase of oil production currently has maintained 26 dollar level. The OPEC countries are likely to take a wait-and-see attitude. The OPEC is executing the oil price band system which increases the oil production in case that the standard oil price continues to be over $28 for 10 days.

But because Iraq declared not to resume the oil export until the Security Council takes the decision back, the rise of oil price seems inevitable in case that Iraq continues to halt oil export. Iraq has produced 2.2 million barrels per day, 5 percent of the world oil market. The OPEC has supplied 24.2 million barrels per day from March, decreased by 4 percent.

Lee Jong-Hoon taylor55@donga.com