Oil prices fall on Iraq vote delay and Saudi pledge

Oil prices fall on Iraq vote delay and Saudi pledge

Barbara Lewis, Reuters, London

World oil prices fell on Tuesday as the United States and Britain delayed a UN Security Council vote on a deadline for Iraq to disarm or face war and Saudi Arabia pledged to ensure there would be enough oil.

U.S. light crude slipped 33 cents to US$36.94 a barrel, below its recent peak of $39.99. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell 37 cents to $33.32 a barrel.

Traders were awaiting the outcome of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna scheduled to begin at midday.

The meeting was expected to stop short of endorsing a mooted plan to allow members to pump oil at will and to instead maintain existing output limits of 24.5 million barrels daily.

But the cartel was also expected to signal its intention to ensure supply in the event of a disruption.

As the market awaited, traders said that on Tuesday prices might weaken, but not for long.

"Prices might come off a little bit, but it will be short- lived," said Rob Laughlin of GNI-Man Financial.

Laughlin said OPEC was anxious to avoid oversupplying the market amid widespread predictions that a possible war in Iraq would cause a brief spike in prices, followed by a collapse provided any war was short.

"They (OPEC) don't want to go from a boom to bust scenario. They don't want to go from high prices to a sudden collapse. They want to have an orderly market," he said.