Iraq oil stays on hold, Baghdad wants surcharge

BAGHDAD, Iraq (Reuters) -- Iraq Monday applied the brakes again on the resumption of oil sales under the United Nations' oil-for-food program by insisting on an illegal surcharge.

Just as Iraq seemed about to restart exports, Baghdad told customers they would have to make a payment direct to an Iraqi bank account, industry sources said.

To secure cargoes, buyers would have to pay 40 cents a barrel above the prices agreed with the United Nations last week for December sales.

Under the U.N. oil-for-food humanitarian program, buyers make payments straight to a U.N. escrow account. Iraq wants to regain some direct control over the revenues.

Iraqi state oil marketing organization SOMO had renewed a written notice asking for the payment and said verbally that the charge required was 40 cents a barrel.

SOMO said the charge applied immediately to sales from both permitted exports points under the U.N. exchange, Iraq's Gulf port Mina al-Bakr and the Turkish port of Ceyhan, the industry sources said.

"No way are we going to be turning a blind eye to this," said a Security diplomat at the United Nations in New York, noting funds not going through the United Nations would be a violation of sanctions.

Dealers had assumed that the surcharge, first raised by Baghdad in November, had been quietly dropped after December prices were settled with the U.N. last Friday.

Confusing the picture, later Monday, a tanker chartered by state Indian Oil Corp, moved alongside the berth at al-Bakr. But industry sources said the tanker had yet to start loading.

Dealers speculated that India might have been excused the surcharge after the visit in November to New Delhi of Iraq's vice president and oil minister, when an agreement in principle was signed for a wheat-for-oil barter.

The continued stoppage helped push Brent oil prices up 98 cents to $27.54 after a $6.50 slump over the past two weeks.

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