Oil drops despite low reserves
World oil prices fell back on signs of an uprising against President Saddam Hussein in Iraq's second largest city of Basra.
US light crude fell 69 cents to $US27.97 a barrel after a $1.75 jump on Monday.London Brent crude dropped $1.28 a barrel to $US24.81.
The British chief of staff at Central Command battle headquarters said on Tuesday early indications suggested an uprising might have started in Basra.
The reports reversed early gains made as Iraqi forces resisted a US-led military thrust toward Baghdad while tribal violence in Nigeria kept nearly 40% of the country's crude output shut.
Oil fell 25% last week as traders bet on a short war with little damage to Iraq's oil industry. Before the conflict, Iraq exported about 1.7 million barrels per day (bpd) to the 77 million bpd world market.
But confidence in a quick war waned after the weekend as US and British forces suffered casualties and saw slower progress.
Meanwhile, a series of bloody clashes in Nigeria forced closure of just over 800,000 bpd of the 2.2 million bpd produced by Western oil firms in the West African OPEC nation.
Ethnic groups in the oil-rich Niger Delta have said they were battling for a greater share of the country's oil wealth.
Nigeria is one of the top six oil exporters to the United States, where fuel supplies have been running at 27-year lows partly due to an oil workers' strike in Venezuela.
Nigeria, which averaged 560,000 bpd to US refiners last year, where its crude is valued for its high gasoline content, also exports to Europe and Asia.
"Nigerian crude is not the kind of stuff you want to be short of," said Paul Horsnell, oil analyst at JP Morgan. "It's very serious. It's not a little local disturbance."
OPEC said it could make up any shortfall in supply from Nigeria, its fifth largest producer.
The group has also pledged to make up for the disruption to Iraqi exports, but now has only the slimmest of spare capacity cushions.