London, March 20 (Reuters): Oil prices tumbled to three-month lows on Thursday after the United States began bombing Iraq and dealers bet on a swift US victory with little disruption to West Asia supply.
The Organisation of the Petroleum Exporting Countries (Opec) pledged to fill any supply gap from the conflict in the oil-rich Gulf, while the West’s energy watchdog, the International Energy Agency (IEA), said it saw no reason to release emergency stocks.
Hours after the US Cruise missiles hit targets in Baghdad, officials in neighbouring Kuwait said oil output was normal, despite two Iraqi missiles hitting the north of the country.
Oil tanker traffic from the Gulf, which provides 40 per cent of world oil exports, was also running smoothly, shippers said.
The benchmark Brent crude oil fell eight cents to $ 26.67 per barrel, having touched a three-month low of $ 25.50 soon after the attack began.
Oil has shed a quarter of its value in the last six days on a massive bet by investment funds that war will end quickly without major damage to oil installations.
US crude futures for May delivery fell 43 cents to $ 28.93. “The war premium is diminishing on a growing certainty that coalition forces will prevail and allow Iraq to increase production,” Peter Gignoux of Schroder Salomon Smith Barney said.
Industry consultant Geoff Pyne said there were still dangers ahead that could drive prices back up. “Most obviously, there is a danger that Saddam may blow up the Iraqi oilfields,” he said.