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Growing certainty of Iraq war sends oil prices sliding
New York, Mar 18: World oil prices skidded sharply lower as traders anticipated a quick US-led military victory in Iraq that may trim back a large war premium.
New York, Mar 18: World oil prices skidded sharply lower as traders anticipated a quick US-led military victory in Iraq that may trim back a large war premium.
"The markets' reaction shows that investors generally expect a quick war in Iraq, even if I was personally expecting a spike in prices as the war begins," said Fimat analyst Mike Fitzpatrick yesterday.
New York's benchmark light sweet crude contract for delivery in April dropped 45 cents to 34.93 dollars a barrel.
London's reference Brent North Sea crude oil for May delivery fell 65 cents to 29.48 dollars. Fadel Gheit, senior energy analyst at Fahnestock and Co, said US President George W. Bush's national address in the evening had crystalised expectations of war in the next few days.
US officials said Bush would give a final ultimatum to Iraqi President Saddam Hussein to leave Baghdad to avert war.
"Initially, oil prices came down, and then they recovered somewhat," Gheit said.
The war premium had inflated prices 10-15 dollars a barrel above where they otherwise would be trading, Gheit said.
"Now, since we have a war right around the corner, prices are begining to ease," he said.
"If we have a short war or no war - and a miracle happens and Saddam Hussein takes a flight out of Baghdad - I think oil prices will deflate significantly because there is plenty of supply right now and demand is going to come down very sharply once the winter season is over."
Organization of Petroleum Exporting Countries (OPEC) members were producing oil as fast as they could, Gheit said.
Bureau Report
"The markets' reaction shows that investors generally expect a quick war in Iraq, even if I was personally expecting a spike in prices as the war begins," said Fimat analyst Mike Fitzpatrick yesterday.
New York's benchmark light sweet crude contract for delivery in April dropped 45 cents to 34.93 dollars a barrel.
London's reference Brent North Sea crude oil for May delivery fell 65 cents to 29.48 dollars. Fadel Gheit, senior energy analyst at Fahnestock and Co, said US President George W. Bush's national address in the evening had crystalised expectations of war in the next few days.
US officials said Bush would give a final ultimatum to Iraqi President Saddam Hussein to leave Baghdad to avert war.
"Initially, oil prices came down, and then they recovered somewhat," Gheit said.
The war premium had inflated prices 10-15 dollars a barrel above where they otherwise would be trading, Gheit said.
"Now, since we have a war right around the corner, prices are begining to ease," he said.
"If we have a short war or no war - and a miracle happens and Saddam Hussein takes a flight out of Baghdad - I think oil prices will deflate significantly because there is plenty of supply right now and demand is going to come down very sharply once the winter season is over."
Organization of Petroleum Exporting Countries (OPEC) members were producing oil as fast as they could, Gheit said.
Bureau Report