Saddam to give Jordan $300 million worth of oil January 22, 2000 Web posted at: 6:24 PM EST (2324 GMT)

BAGHDAD, Iraq (AP) -- Iraqi President Saddam Hussein has agreed to give Jordan $300 million worth of crude oil this year, Jordanian and Iraqi ministers said Saturday.

The grant was part of two oil and trade accords the ministers signed Saturday after months of negotiations.

Jordan has received all its oil from Iraq at reduced prices since 1991. Jordan pays for the oil by exporting goods to Iraq. The deal is an exemption to the U.N. sanctions imposed on Baghdad for its invasion of Kuwait.

Saddam's grant, previously set at $250 million, represents almost half the value of oil that Jordan wants to import from Iraq this year, said Jordanian Minister of Energy and Mineral Resources Waiel Sabri.

"I extend my gratitude for the grant ordered by his excellency President Saddam Hussein, which is highly appreciated by the Jordanian people," said Mohammed Halayqah, the Jordanian minister of trade and industry.

Jordan has agreed to pay a maximum of $19 a barrel for any oil it imports above the grant, so long as the world price maintains its current high level. Iraq currently sells its oil at $24 per barrel.

It is not clear what prompted Iraq to offer Jordan terms even better than last year. There has been a strain in the countries' relations because of Jordan's shift toward Saudi Arabia and Kuwait, Iraq's main opponents in the Arab world, and its hosting of Iraqi dissident groups. http://cnn.com/2000/WORLD/meast/01/22/iraq.jordan.ap/index.html

-- boop (leafyspurge@hotmail.com), January 23, 2000

Answers

Don't sweat it boop - It'll soon be at 24 Euros per barrel...

-- Andy (2000EOD@prodigy.net), January 23, 2000.

Because if they sell it cheaper than others, more people will buy from them, and they will make more of a profit.

The same reason the gas station I stop at sells gas a lot cheaper than the BP station across the street from it. So more people buy and they end up making a bigger profit in the same amount of time.

Oh, and because they can sell it cheaper, the rise in oil prices is not because of lack of it, it is because of manipulation, as usual. Happens all the time, most people never paid any attention to it before except to complain about it.

-- Cherri (sams@brigadoon.com), January 23, 2000.

Andy,

I've heard talk of Oil being priced in Euro's per barrel, as the new standard at some point? Versus Dollar's now. If I am correct on this in your opinion how will this effect the Dollar? I know that FOA and others over at USAGOLD have written on this but I know you stay right on top of things, and I would appriciate your opinion.

Thanks,

Zguy

-- Zguy (oil@euros.com), January 23, 2000.

Well Zguy IMHO once that happens it is the beggining of the end of the dollar. All bets are off. i.e. Japan will pay for oil in Euros... think about it...

-- Andy (2000EOD@prodigy.net), January 23, 2000.

Cherri you're partially right but actually all Mideast grades trade at a discount to our NYMEX WTI which is a US Midcontinent delivered crude. The US is the biggest market so the further one gets from the US the bigger the discount. That discount is figured based on freight rates to get the barrel here and quality differentials. The Iraqis also pump alot of sour high sulfur stuff so its discounted accordingly...For another example Saudi Light usually trades at a +$3- $4 discount to our NYMEX crude values...

-- Downstreamer (downstream@bigfoot.com), January 23, 2000.

I'm sure the pan-europists would like to see oil quoted in euros, I doubt very much that the oil producers would be happy. Have you charted the value of the Euro, ever? Makes pork bellies look stable by comparison, but without the upticks.

-- Ken Seger (kenseger@earthlink.net), January 23, 2000.

Andy, do you like to mud wrassle?

-- Queen of Saipan (Mogrin@aol.aol), January 23, 2000.

Downstreamer is absolutely correct. Reread his post.

-- Dog Gone (dawgawn@yahoo.com), January 23, 2000.

Political answer:
Iraq needs the sanctions loophole at almost Any price. Granted favors to Jordan will be called upon in a big way when Saudi throne changes occur soon.
Oil money won't buy them happiness, but it will sure give them Political Bedfellows.

Business Answer:
Look at the Long Term price of oil on the futures market. Link
The mainstream seems to think prices will moderate by July(as of 01/23/2000, this *might* change[grin]). Anywise, think "Cost Averaging" over a whole year with this mindset. A contract price for a year and the Spot price can be Very different.

Also, one more thing to think about:
Lots of trucks going back and forth across the Iraqi/Jordan borders on "Official/Legal" business can hide other trucks doing ...(fill in the blank)

-- Possible Impact (posim@hotmail.com), January 23, 2000.