Iraq announces cut oil exports for 30 days

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The Independent Online

Iraqi President Saddam Hussein announced today that Iraq would cut off oil exports starting Monday for 30 days or until Israel withdraws from Palestinian territories, a move expected to send oil prices up but not hurt world supplies.

Saddam's unilateral cut-off could put more pressure on other Arab leaders. Ordinary Arabs have taken to the streets demanding their governments cut ties with Israel, wield the oil weapon or supply the Palestinians with tanks, but moderate Arab leaders have moved cautiously while calling on the United States to make Israel retreat.

In a nationally televised speech, Saddam said Iraq's top leaders met earlier Monday and decided "in the name of the people of Iraq ... to stop exporting oil totally as of this afternoon through the pipelines flowing to the Turkish ports and the south for 30 days" unless Israel withdrew earlier. He said that if Israel had not withdrawn within the 30 days, Iraq would consider what action to take.

Oil Minister Amer Mohammed Rashid said the move took effect as Saddam spoke at about 2pm.

Gulsum Korkmaz, a spokeswoman for the Turkish state­run pipeline company BOTAS said Turkish authorities had not been formally notified of any Iraqi decision to halt exports.

"The pipeline is running as normal for now, but of course we cannot tell what will happen later," Korkmaz told The Associated Press.

Iraq began calling on Arabs last week to cut oil supplies as a way of pressuring the United States, whose economy runs on oil, to force Israel to end its military incursions into Palestinian territory.

An oil sales boycott would be ineffective without Saudi Arabia and Kuwait, who have rejected Iraq's call to use oil as a weapon. Many Gulf states depend on oil revenues for more than two­thirds of government income and cannot afford to stop sales.

Nonetheless, Iranian supreme leader Ayatollah Ali Khamenei on Friday called on Islamic countries to stop supplying oil for one month to countries with close relations with Israel. Libya announced Monday that it supported the call, in a report on its state news agency, JANA.

The Israeli­Palestinian conflict has affected world oil prices, and the first hints from Iraq last week of a possible boycott had caused a brief price spike last week.

"The Iraqi decision will certainly have an immediate impact on the prices given the volatile situation in the Middle East and recent oil disruption in Venezuela," said Walid Khadouri, editor in chief of the Middle East Economic Survey, "But it is not expected to impact the supplies in the world market. Both other OPEC exporters and the huge strategic and commercial reserves in the industrialized nations can augment that."

Khadouri said that could change if Libya and Iran followed Iraq's lead, but noted they had indicated they would only participate in collective action, "and there are no signs that this will happen,"

The last time oil­producing Arab nations used oil as a political weapon was in 1973, when reduced exports caused a global energy crisis. Since then, the world's wealthiest nations have created the International Energy Agency to provide a cushion against any similar disruption.

Based in Paris, the IEA can tap into 4 billion barrels of strategic oil reserves maintained by its member countries. That's equal to more than five years of Iraqi production, based on the IEA's estimate of Iraq's output in January.

In November 2000, Saudi Arabia led the adoption of a pledge by the Organization of Petroleum Exporting Countries and other major exporters that oil would not be used as a political weapon.

Iraq's trade with the outside world is restricted by UN sanctions imposed to punish it for its 1990 Kuwaiti invasion. Under so­called "oil­for­food" program exemptions dating to 1996, Iraq is allowed to sell unlimited amounts of oil to buy food, medicine and other humanitarian supplies, and to pay war reparations.

Iraq also is believed to be smuggling oil outside the UN oil­for­food regime. And Saddam did not mention any cut in sales to neighbor and ally Jordan, which it supplies by truck instead of the pipelines to which Saddam referred in his speech.