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Iraq has decided to freeze its first crude oil prepayment deal, which had aimed to boost its finances, because oil prices are rising, the country’s oil minister told BBC Arabic on Sunday.

“We had concerns that oil prices would not rise above $40 when we announced this deal for the first time in the history of Iraq,” Ihsan Abdul Jabbar told the channel.

Brent crude has been trading above $60 a barrel recently.

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Asked about the status of the prepayment crude oil deal, Oil Minister Abdul Jabbar said: “With the start of this year and the economic stability resulted from boosted oil prices, we decided to freeze this option”.

Chinese state oil trader Zhenhua Oil Corp had emerged as the front-runner in a tender to buy Iraqi crude for five years after it submitted the “most competitive bid” in the tender held by Iraq’s state oil marketer SOMO that attracted participation from international oil companies, trading houses and Chinese and Indian refiners.

OPEC member Iraq was seeking a five-year prepayment starting January 2021 until December 2025 to be repaid with cargoes of its Basra crude, according to a letter sent by state oil marketer SOMO to its customers and seen by Reuters.

Under the prepayment deal, the winner of the tender was to pay SOMO about $2.5 billion in return for 48 million barrels of crude between July 1, 2021 and June 30, 2022.

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