Opec bids to reverse slump in oil prices

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OIL prices remained in a downward trend today as United States forces continued to pound targets in Baghdad, bolstering speculation of a swift end to the war.

But analysts said a call by the head of the Organisation of the Petroleum Exporting Countries (Opec) for the producers’ cartel to meet in a little over two weeks could help limit the slump in the price of oil, which has fallen as much as ten per cent since the war began 20 days ago.

US light crude, which has fallen more than 30 per cent since it peaked at $40 a barrel in February, slide a further 1.4 per cent to $27.56 a barrel this morning. London’s Brent crude dipped to $24 a barrel, bringing losses to ten per cent since the start of the war.

Traders believe a short-lived war may mean minimum damage to Iraq’s oil infrastructure, allowing Iraq, normally the world’s seventh biggest exporter, to restore production relatively quickly.

Oil prices have also come under selling pressure as recent figures on the US economy have raised concerns it may be heading into recession, which would choke demand for petrol.

Sweeping cuts to air traffic because of Middle East hostilities and the deadly flu-like Sars virus in Asia have sharply dented requirements for jet fuel, at a time when oil demand traditionally declines at the end of winter.

Worried by the steep price falls, Opec president Abdullah al-Attiyah said he had proposed an emergency meeting of the producers’ group to consider steps to counter a looming glut.

Ministers from Opec countries were next scheduled to meet on June 11 in the Qatar capital, Doha, but Mr Attiyah, who is also Qatar’s oil minister, proposed the group should meet on April 24.

Oil analyst David Thurtell, of Commonwealth Bank in Sydney, said: "Opec is being proactive, using their usual manner of up by the stairs and down by the lift.

When prices are heading up, they act cautiously and slowly, but on the way down they will act decisively. I imagine they will try and cut back at least some of the increase they made for Venezuela."