Iraq said Thursday that it is willing to sell its oil to all sides in the Persian Gulf conflict, including the United States, for $21 per barrel, OPEC's benchmark price before Iraq's invasion of Kuwait.
The announcement appeared a sign that Iraq was feeling the pinch of the U.N.-ordered embargo. Oil had been its only significant source of export earnings and Iraq is not now able to sell its crude on the open market.Oil Minister Isam Abdul Rahman al-Jalba proposed that payments be placed in an escrow fund because of the sanctions.
"We accept that the price of sold oil is not to be transfered to Iraq but to deposit according to a special arrangement, and Iraq will not deal with it normally until we get over this crisis, and when the problems settle down on the bases of relations empty from any crisis," al-Jalba said.
Oil has nearly doubled in price to nearly $40 per barrel since Iraq touched off the crisis by seizing oil-rich Kuwait.
The Iraqi announcement appeared aimed at enticing countries that are feeling the economic pinch of high oil prices into losing their resolve and abandoning the U.N. embargo.
A prominent Kuwaiti economist, Jassem al-Saadoun of the al-Shall financial house, estimated Wednesday that the U.N. embargo is costing the Iraqis $54 million a day.
Prior to the invasion, Iraq's OPEC production quota was 3.1 million barrels a day. Much of that, and Kuwait's production of 1.5 million barrels a day, has been replaced by production increases by Saudi Arabia and other OPEC countries.