Global Policy Forum

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New York - Iraq continues to sell just over two million barrels of oil per day as it appears headed for a simple rollover of existing conditions in its "oil-for-food'' program when the current 180-day sales phase ends May 24. This would mean a sixth 180-day phase in which Iraq would be allowed to sell up to $5.26 billion of oil to buy food and supplies for its people suffering under international sanctions since 1990. About two-thirds of the revenue buys these supplies.

According to figures released by the United Nations on Monday, Iraq exported an average 2.06 million bpd in the week ending May 7, with an average price per barrel of $14.44, down from 2.27 million bpd and $15.09 per barrel in the prior week. The four-week average for Iraqi oil exports is now 2.1 million bpd, sold at an average price of $14.48 per barrel.

If prices for Iraq's crude oil remain between $14 and $15 per barrel where they now are, it can reach the sales ceiling in the sixth sales phase. In the fifth phase, Iraq is expected to reach sales between $3.9 billion and $4 billion, a calculation by Reuters shows.

Looking ahead to the sixth phase, diplomats said there was too much distance between the powerful permanent five members of the United Nations Security Council to allow agreement on the major issues around the oil-for-food program. One well-placed diplomat from a Western European nation said there is no way they can agree on whether to lift sanctions, which were placed on Iraq in 1990 when it invaded Kuwait. Also standing no chance is an idea that foreign companies will be allowed to invest in Iraq's oil industry to boost production and exports.

The third major issue is whether to eliminate the sales ceiling for Iraqi oil within the scope of the oil-for-food program. There is still a chance that the council will approve this change, U.N. diplomats said. But they also said it may be more expedient to allow a simple rollover of current terms.

Iraq is still the most important player in this mix, regardless of what the Security Council may decide. Saddam Hussein clearly doesn't like the oil-for-food program and has used negotiations on the oil sale to make wider political points regarding lifting of sanctions.