Oil plunges as war deadline approaches

edmonton.cbc.ca Web Posted : Mar 18 2003 12:34 PM CST

London - Crude oil prices staged their biggest one-day drop in more than a year Tuesday, as traders speculated that an Iraq war would be so short and decisive that Middle East supplies would not be severely disrupted.

In New York, April crude futures were down by $3.18 US to $31.75 US a barrel by early afternoon.

With war now a virtual certainty, traders are rushing to unwind positions ahead of a further price drop, once it's clear oil will keep flowing.

Saudi Arabia has moved to made good on earlier promises to ramp up production in the event of any supply shortages. And OPEC has already said it would not allow a supply shortage to develop.

The U.S. government has also signalled that it is prepared, if necessary, to release supplies from its 600-million barrel strategic oil reserve.

Oil topped out at $39.99 US a barrel in late February as war fears combined with a bitterly cold month and production problems in Venezuela to drain reserves.