20 March 2003

Barely a week ago the Opec oil cartel met in Vienna with one goal: to reassure the world that it would not go short of oil if the US went to war with Iraq. Eight days later the chief concern of the group's 10 active members has shifted 180° to the possibility of a significant oversupply. A similar turnaround has occurred in Paris and Washington, where officials last week were gearing up to release some of the oil from their strategic stockpiles to counter a loss in Iraqi production. Whether that will now be necessary has been called into question by the recent slide in oil prices. The New York benchmark oil price slid a further 82 cents to $30.85 yesterday, a 23 per cent drop from last month's high of $39.99, while London's Brent benchmark broke its fall, climbing 3 cents to $27.28. What the price will do as the bombs begin to fall over Baghdad will depend in large part on whether the 26 members of the International Energy Agency, led by the US, stick to their plan to release as much as 2.5m barrels per day from their strategic stockpiles of oil.