- The Washington Times - Friday, April 18, 2003

LOS ANGELES, April 18 (UPI) — There was a sense of growing international impatience Friday over the lack of a rapid timetable for the withdrawal of allied troops from Iraq and the formation of a new government in Baghdad that would have the authority to restart the nation's vital oil industry.

With calm returning to the cities and villages following the overthrow of Saddam Hussein, the focus of the world's attention has turned from the battlefield to the formidable task of post-war nation building, a job that will be financed largely by the revenues from oil sold on the world market.

Iran's Minister of Foreign Affairs declared Friday that it was the Arab world's view that the United Nations should play a major role in both reconstruction and the formation of a new Iraqi government that would have the authority to commence oil sales.

"The Islamic Republic of Iran emphatically asks the invading forces that claim they have attacked Iraq to secure the establishment of democracy there, to prove their sincerity in that regard and avoid insulting the Iraqi nation by appointing an American military commander in their country," Kamal Kharrazi said in an Iranian media report monitored by the British Broadcasting Corp.

United Nations sanctions restricted Iraqi oil sales to those made under the food-for-oil program, which expires May 12. A change in the sanctions regime could allow oil to flow once again. However, Russia threw a wrench into the scenario this week when it ventured that the sanctions could not be lifted until it was proven that there were no weapons of mass destruction remaining in Iraq.

Despite the Bush administration's unhappiness with the Security Council, the United States has urged the United Nations to reject the red-tape requirements to lifting sanctions offered by the Russians, which could take months to satisfy.

"We need not have everyone go to their corners and talk about theological expressions of what the U.N. has to be, but all should unite now and do what is best for the Iraqi people," a senior U.S. official told the Washington Post. "That means when it comes time to lift sanctions, it ought to be done because it will benefit the Iraqi people."

Despite the seeming unanimity in favor of a rapid transition, it will likely take several weeks for Iraq to legally be in a position to sign contracts and begin selling oil. In the meantime, world oil supplies could actually shrink.

OPEC appears determined to throttle back its production due to what it sees as a world crude surplus despite the fact average prices have been solidly within the $22-$28 per barrel "basket price" of OPEC crude varieties that the cartel uses for guidance in production matters.

Traders, who continue to see worrisome low pre-summer supplies of both crude and gasoline, chose to not get caught short over the three-day weekend and bid the New York Mercantile Exchange price for May crude up by a healthy $1.37 to $30.55 per barrel on Thursday. The May NYMEX contract expires next week, leaving traders little time to cover their needs in the event of an unforeseen supply disruption.

The most likely potential for weekend trouble exists in Africa where Saturday's presidential vote in Nigeria at least raises the potential for a new outbreak of ethnic violence in the oil-rich Niger Delta.

President Olusegun Obasanjo has warned the opposition not to cause trouble this weekend, but opponents have loudly voiced concerns that the government could try to tamper with the vote.

Nearly 1 million barrels per day (bpd) of crude production in the delta was shut down for several days earlier this month due to civil unrest.

Around 300,000 bpd of capacity remained off line Friday, and the French oil major TotalFinaElf has vowed not to resume operations until after the election.




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