Oil prices plunge as Iraq signals higher crude exports

Oil prices plunge as Iraq signals higher crude exports

LONDON (Reuters): World oil prices fell again on Tuesday after
Iraq said it would be able to raise crude exports under a new
phase of the United Nations oil-for-food exchange.

Benchmark North Sea Brent blend crude oil futures for July
delivery fell 22 cents to US$14.98 a barrel after the
announcement on Monday by the Iraqi oil minister.

Amir Muhammed Rasheed said his country was planning to
increase sales under the sixth 180-day phase of the U.N. deal to
an average 2.2 million barrels a day (bpd).

Baghdad had exported an average of two million barrels daily
in the fifth phase which ended last week. It has been able to
almost double exports since the beginning of last year.

Rasheed said Baghdad planned to start reusing in a "short
time" its export line via Syria to complement deliveries through
Turkey and Iraq's Gulf coast. He said the line would supply
300,000 bpd to Syria's Mediterranean coast but gave no indication
of exactly when it would reopen.

The United Nations has said if Iraq gets close to the $5.26
billion cap for sales under the sixth phase it will reconsider
the limit in order not to disrupt humanitarian supplies.

Preliminary loading schedules on Tuesday from Iraq's State Oil
Marketing Organization SOMO showed heavy volumes for the first
half of June, industry sources said.

The first Iraqi cargo under the renewed U.N. program was
loading on Tuesday at the Turkish port of Ceyhan bound for
Spanish refiner Repsol, traders said.

Oil prices are on the slide again despite OPEC's efforts to
reduce stockpiles by reining in supplies. Brent surged from less
than $10 in February to $17 in early May after the Organization
of the Petroleum Exporting Countries announced output curbs.

"Bearish sentiment is being compounded by the refinery run
cuts which are being seen across the globe," said Lawrence Eagles
of brokers GNI.

Italy's ERG on Tuesday became the latest European refiner in
recent weeks to announce reduced refinery operations to combat
sickly profit margins caused by low petroleum product prices.

ERG said it was slicing crude use during June at its Sicilian
Priolo refinery, one of southern Europe's largest, following
similar moves in recent weeks by BP Amoco and Shell.

In Singapore, Shell and Mobil both said they were cutting
refinery operations.

Pressure on oil prices has also come in recent weeks from
Russia where unexpectedly large export volumes have emerged as a
result of the weak ruble and falling domestic consumption.