Iraq: Oil Prices Not Too High Yet

Iraqi Oil Minister Amir Muhammed Rasheed said that oil prices were not too high and accused the United States of overreacting to the rally. Rasheed also said that Iraq might further reduce its oil exports if spare parts bought under its oil-for-food deal remained in hold. "We think prices now are not too high," Rasheed said. "The prices should be normally around $25 to $27 and I am talking about OPEC oil basket prices. We are surprised by the overreaction of the administration in the United States to the prices. We see in this respect still a double-standard," he said. The OPEC basket price of seven crudes has averaged $25.40 a barrel so far this year with last week's average at $27.30. Rasheed said Iraq had to reduce its oil exports, "from mid- December ... by about quarter of a million to 300,000 barrels per day because of holds on oil spare parts." He added that if the holds continue, "our spare parts we might cut further." Latest United Nations figures show Iraq exported 2.7 million bpd in the week ending Feb. 18, but with a four-week average of 1.98 million bpd. Baghdad has often accused the U.S. envoy at the U.N. sanctions committee of blocking contracts for spare parts to repair its battered energy industry. "Holds have increased in the sixth phase of memorandum of understanding to more than 80 percent," Rasheed said. He said sanctions imposed on Iraq for its 1990 invasion of Kuwait would not be lifted by a U.N. Security Council resolution, therefore Baghdad would do whatever necessary to break them, even oil smuggling. Asked about his opinion on reports saying smuggling of Iraqi crude had doubled, he said, "this is very normal and natural and it is only just." "It was our wish to produce about this time 3.25 million bpd and still our intention towards the end of this year to have 3.5 million bpd," Rasheed said. He said Iraq was seeking to be included in the OPEC quota system. "We have asked OPEC to include Iraq in the quota system to have a quiet large amount of allocation for Iraq." - (Reuters)