Iraq Sends Oil Prices Soaring
Iraqi President Saddam Hussein has pulled the plug on Iraqi oil exports. The unexpected move sent world oil prices soaring and could impact winter heating costs.
CBS News Correspondent Mark Phillips reports that the move signals a mysterious Iraqi policy shift that the rest of the world is still trying to figure out. But the immediate effect has been to bump oil prices up to a 9-year high.
The 3-year-old exemption to crippling economic sanctions allows Iraq to sell $5.2 billion worth of oil every six months to buy food, medicine and other humanitarian supplies as well as to pay reparations stemming from the 1991 Persian Gulf War.
Iraq's rejection of the extension is not expected to have a major impact on the humanitarian program because U.N. officials say supplies are continuing to arrive normally.
More than $2 billion worth of humanitarian supplies and equipment approved under the program has not yet reached Iraq - and another $2 billion from Iraqi oil sales is in an escrow account waiting to be spent, said John Mills, spokesman for the U.N.'s oil-for-food program.
On a one-day visit to Bratislava on Monday, U.S. Secretary of State Madeleine Albright said Iraq had once again "shown its true colors ... by turning down the possibility of having food, more food and medicine for its people by selling more oil."
Iraq views the two-week extension of the oil-for-food program as a tactic by the United States and Britain to pressure Russia and China, its closest allies on the Security Council, to agree to a new Iraq policy backed by Washington and London, diplomatic sources said.
Russia and China favor the suspension of sanctions soon after Iraq allows U.N. inspectors to return while the United States and Britain are demanding a longer waiting period and Iraqi answers to outstanding questions about its disarmament.
The five permanent council members - the United States, Britain, France, Russia and China - met again Monday to discuss the comprehensive resolution.
In any case, Iraq has been selling about five percent of the world's oil. If that supply stays cut off, it's anticipated that other exporters will make up the slack and that prices won't be effected for long.