Oil Pricing Dispute

Disputes with Iraq over oil price kickbacks in 2001 led the US and the UK to demand stern UN price-setting measures that soon led to falling Iraq oil sales and a dangerous slump in revenue for the humanitarian Oil-for-Food program.

Iraq Crisis Page

Policy Paper on Iraq Sanctions (August, 2002)

General Articles

2002

Oil Pricing Disputes and Shrinking Humanitarian Revenue (August 6, 2002)
This excerpt from the report Iraq Sanctions: Humanitarian Implications and Options for the Future discusses the dispute over the Iraqi oil pricing mechanism, which leads to shortfalls in Iraqi oil exports and, consequently, a financial crisis for the humanitarian oil-for-food program. (Global Policy Forum)

Excerpt from the Secretary General Report Pursuant to Paragraphs 7 and 8 of Security Council Resolution 1409. (November 12, 2002)
This excerpt presents facts and problems related to the revenue from Iraqi oil exports. The UN Secretary General recommends that "concerned parties" solve the disagreement over the pricing of Iraqi oil to improve the critical funding situation for the Oil-for-Food program. (United Nations)

Statement by OIP Executive Director Benon Sevan (September 25, 2002)
This excerpt focuses on falling Iraqi oil sales and its negative effects on the Oil-for-Food program's growing revenue shortfall. Benon Sevan identifies the system of retroactive pricing as one reason for this shortfall. (Office of the Iraq Programme)

Letter to UK Ambassador to the UN Sir Jeremy Greenstock Regarding Iraqi Oil Pricing (September 23, 2002)
NGOs express their concern with the humanitarian impact of Iraq sanctions. The letter draws special attention to the effects of the Security Council's oil export pricing mechanism, which results in reductions in Iraqi oil sales and a financial crisis of the Oil-for-Food program.

Too Early To Change Iraq Oil Price Policy (September 19, 2002)
The US and UK argue that they need more evidence of the cessation of illegal surcharges and kickbacks for Iraqi oil before making changes to the current retroactive pricing policy. Russia previously blocked British and French attempts to change the pricing policy.(Reuters)

Trading Firms Accuse UN Of Purposely Depressing Iraqi Oil Sales (August 12, 2002)
Major oil trading firms blame the UN sanctions committee for minimizing Iraqi oil sales, setting uncompetitive prices and increasing shortfalls in funds, resulting in serious consequences for the humanitarian situation in Iraq. (Mees)

UK Proposal For A Proactive Pricing Mechanism (July 11, 2002)
The United Kingdom proposes a proactive pricing system, which allows "Green List" companies access to advance notice of prices at the end of every month. The proposal also includes sharp limitations on companies that can trade in Iraqi oil. (CASI)

Britain Proposes New Iraq Oil Pricing Policy to Try to Reverse Drop in Exports Which Fund UN Humanitarian Program (July 10, 2002)
The UK proposes changes to the Iraqi oil pricing mechanism, which has created a revenue crisis for the UN humanitarian program in Iraq. By putting forward the proposal, the UK seems ready to consider alternatives to the prevailing policy, which has discouraged traders and oil companies from purchasing Iraqi oil. (Associated Press)

Disputes Over Iraqi Oil Pricing Undercut Funding Of Oil-For-Food Program (June 27, 2002)
The UN oil-for-food program struggles with a shortfall of funds as Iraqi oil exports decline due to a conflict over the pricing mechanism of Iraqi oil. Radio Free Europe looks at this dispute and how it restricts the delivery of humanitarian goods to Iraq. (Radio Free Europe)

French Proposal for Iraqi Oil Pricing (June 21, 2002)
France calls for a "proactive pricing" system of Iraqi oil. According to the proposal, the UN Sanctions Committee should set oil prices at the start of the month for the first 15 days, then on day 15 decide whether to maintain those prices for the balance of the month. (CASI)

Statement by OIP Executive Director Benon Sevan (May 29, 2002)
In this excerpt Benon Sevan expresses his concerns regarding the price setting of Iraqi crude oil. He argues that the continuing practice of retroactive pricing of Iraqi oil by the 661 Committee, in combination with excessive premia demanded by Iraqi crude oil contract-holders, lead to losses in revenue for the humanitarian program. (Office of the Iraq Programme)

Paper by the United Nations Oil Overseers (March 14, 2002)
The UN Oil Overseers, established by the UN Sanctions Committee, discusses the Iraqi oil pricing mechanism and its consequences on Iraqi exports and revenues. It analyzes efforts to reduce premia through measures to set the price of Iraqi oil close to "fair market value" and to select customers on an integrity basis. (CASI)

Statement by OIP Executive Director Benon Sevan (February 26, 2002)
In this excerpt Benon Sevan calls on the 661 Committee on Sanctions to turn attention to the humanitarian program's financial crisis and the problems of retroactive pricing. Included are also two annexes on allocation of total oil revenue, as well as oil proceeds and humanitarian supply letters. (Office of the Iraq Programme)

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