United Nations: A fresh attempt by the Security Council to break the impasse over pricing of Iraqi oil has failed again with the US and Britain insisting that Baghdad first drops its "illegal" surcharge on oil exports.

Both Washington and London maintain that Iraq's imposition of surcharge of upto 50 cents on each barrel of oil sold under the United Nations "Oil-for-Food" progamme is illegal.

To overcome that, the two countries insisted that the price of oil be fixed only after shipments are made, as it would prevent Baghdad from levying the surcharge. Should the price be fixed beforehand, Baghdad could reduce the price by the amount of the surcharge, they argued.

Under the UN monitored "Oil-for-Food" programme, the revenue from oil sales goes into an escrow account run by the world body and each contract for sale of oil and purchase of medicines, food and other humanitarian commodities has to be approved by a Security Council committee in which the permanent members have a veto.

After experts failed to break the impasse, a meeting at Ambassadorial level was held on August 19 at which, diplomats say, Russia said that Iraq would drop surcharge if the Council agreed to go back to the earlier formula of fixing the price beforehand.

But Washington and London wanted Iraq to stop charging surcharge first with US maintaining that once Baghdad stopped imposing the surcharge, it would be prepared to consider maximising oil exports from Iraq.

PTI