THE United State yesterday withdrew its opposition to a plan that will permit Iraq to sell up to $2 billion worth of oil (£1.25 billion) and use the proceeds for humanitarian purposes.
The move clears the way for the first approved international sales of Iraqi oil since the Gulf war began in 1990.
Ms Madeleine Albright, the US delegate to the United Nations, announced that Washington had dropped objections that had delayed the UN Security Council sanctions committee's approval of a scheme to distribute food and medicine to Iraq's civilian population, including rebel Kurds in the north.
All 15 Security Council members sit on the sanctions committee and the US was the only member to object when the panel met last week.
Oil prices yesterday dipped 20 cents for the benchmark Brent Blend for September delivery but recovered in late trading to end at $19.475 a barrel, a fall of two cents on the day.
Some traders fear the return of an estimated 700,000 barrels a day of Iraqi crude oil to world markets after a six year absence could trigger further price falls, as Baghdad battles to recover customers lost to rival Middle Eastern producers such as Iran, Kuwait and Saudi Arabia.
It was unclear last night when the first oil would be shipped. Oil traders said 12 million barrels of Iraqi crude were stored at the Turkish port of Ceyhan ready for loading on to tankers. Iraqi officials said it could take only two weeks to conclude the first sale.
But western diplomats said a month might be needed to ensure enough aid and oil sales monitors were in place in Iraq to make certain the regime's compliance with the UN guidelines.
The Organisation of Petroleum Exporting Countries, whose member countries control more than a third of world supply, has said it would call an emergency meeting if Iraqi oil sent world prices tumbling.
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