Iraq to resume oil exports

Oil worker operates valve at al-Dora refinery, Iraq

SINGAPORE – Oil prices dropped sharply on Monday after Iraq said it would resume exports following a month-long ban on sales.

Baghdad plans to resume oil exports on May 8 following a suspension of sales on April 8 in protest at Israel's military action in Palestinian territories.

It blamed other Arab countries for not joining its embargo aimed at putting pressure on the U.S. to reign in Israel's incursion. Iraq is a leading crude supplier into the United States, the world's biggest oil consumer.

"The decision did not find a positive response from Arab brethren who posses the oil and who should have taken similar steps in line with the Iraqi initiative to make it successful,'' Iraqi television said in a statement after a cabinet meeting chaired by President Saddam Hussein.

Iran and Libya said they would join the ban if all Arab oil-producing countries joined the embargo but Saudi Arabia, the world's biggest exporter, ruled out the use of oil as a weapon in the Middle East conflict.

U.S. light crude fell 61 cents, or 2.3 percent, to $26.01 in after-hour electronic trading on the New York Mercantile Exchange.

London's International Petroleum Exchange and Japan were closed on Monday for a public holidays.

Crude oil prices have risen by about a third this year, partly amid concerns the Israel-Palestinian conflict could disrupt supplies from the Middle East. Any disruption could wreck a global economic recovery.

But Qatari Oil Minister Abdullah al-Attiyah said on Sunday there was no need for the Organisation of the Petroleum Exporting Counties to increase supply to facilitate lower prices because the market was brimming with oil despite the Iraqi ban.

"I am convinced there is more supply than the market needs,'' Attiyah told Reuters. "There is no question of OPEC increasing production in June.''

OPEC is expected to review production controls on June 26. OPEC currently pumps 21.7 million barrels per day, excluding sanctions-bound Iraq, is the lowest in a decade.