Lebanon Hopes to Agree on Discounted Iraqi Oil Deal in 2 Months

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Source: Bloomberg

Aug. 30 (Bloomberg) -- Lebanon hopes to sign a deal with Iraq in the next two months to buy crude oil below market prices, after Baghdad agreed to sell oil to Jordan at $22 a barrel, the Minister of Finance said.

``We are hoping for a similar agreement,'' Mohamad Chatah, 57, said in an interview in Beirut late yesterday. ``There is clearly a desire on the part of the Iraqi government to help Lebanon.''

An agreement will help reduce inflationary pressures in Lebanon, which imports all of its energy and has an annual $2 billion energy bill, excluding what it pays for electricity, Chatah said. Lebanon's trade deficit widened 34 percent in the first half of this year to $5.6 billion from a year earlier.

``It will definitely help reduce the country's trade deficit,'' said Nassib Ghobril, head of research at Lebanon's Byblos Bank. ``Most importantly it will lessen some of the burden on the treasury and allow the country to save more.''

Lebanese Prime Minister Fouad Siniora traveled to Iraq Aug. 20 and met with his counterpart premier Nuri al-Maliki to discuss closer economic ties. He was the second Arab leader to visit since the U.S.-led invasion in 2003.

The week before Siniora's visit, King Abdullah of Jordan visited Iraq. The next day, Iraq, holder of the world's third- largest oil reserves, agreed to sell oil to Jordan at a discount.

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