US: Oil-for-food increases would help sanctions remain

US Secretary of Energy Bill Richardson, former US representative to the United Nations, said before a joint hearing of the Senate Foreign Relations Committee and the Senate Energy and Natural Resources Committee that the Iraqi oil-for-food program could be increased without posing a threat to international oil prices in part because Iraq cannot meet the current dollar levels of the program due to its production capacity.

"Right now, Iraq is producing around 2.5 million barrels per day. That allows it to export approximately $3 billion dollars worth of oil every six months, well below the current $5.2 billion dollar ceiling that has been set by the UN Security Council. Iraq's ability to increase its production is limited and is not expected to go up measurably this year. As a result, EIA [Energy Information Administration] believes that whatever effect Iraqi production has had on prices has already occurred, because Iraq cannot increase oil production much more over the next year or two," Richardson said.

He also said that three factors in addition to Iraq's production had influenced international oil prices since 1996: the Asian economic crisis, warmer-than-normal winters, and increased production by some OPEC member states.

He said, "The oil-for-food program is a key component of the Administration's Iraq policy, and is, therefore, key to our national security."

Under Secretary of State for Political Affairs Thomas Pickering, who also addressed the committee, said that increasing sales allowed under the oil-for-food program would "serve to counter growing calls from Arab states and Security Council members to lift sanctions outright."

He also said that after Iraq had repaired its oil infrastructure, "Allowing increased Iraqi oil exports would address concerns regarding the shortfall in revenues needed for humanitarian purchases."