The allocations had a value (in this case ~$0.50/bbl) set by Iraq that was a "premium" paid to the holder of the allocation. The Company which exercised the allocation then paid the spot price for the oil at the time the cargo was loaded. The premium was then paid to the original holder of the allocation as an 'agents fee'. All clearly defined by the UN when the OFF program was established.
Oh, OK, kind of like a stock option plan...