23/07/2003 11:41
World oil prices fell sharply after the US said its forces had killed the two sons of Iraq's former dictator Saddam Hussein.
The announcement that Uday and Qusay Hussein - two of the old regime's most feared leaders - were dead raised the prospect of faster progress in the effort to get Iraqi oil flowing again.
The price of crude oil in New York slid $1.59 to $30.19 a barrel on Tuesday night, having hit five-week highs earlier in the week, while London prices dropped $1.20 to $27.49.
"The news that Saddam's sons may have been killed gave traders a feeling that things would be a little bit more settled in that nation," Marshall Steeves, energy market analyst at Refco Energy Group in New York, told Reuters.
There have been frequent announcements that a full-scale return to oil exporting, and thus an inflow of badly-needed hard currency, is just around the corner.
But repeated attacks on pipelines and pumping stations have hampered the push to rebuild installations damaged by war and a dozen years of sanctions.
Arguments over who should share the spoils are also causing trouble.
Iraqis remain suspicious of US motives concerning the country's immense reserves, despite calls for privatisation from the likes of former Iraqi oil minister and energy commentator Dr Fadhil Chalabi.
Doubts
But not everyone was convinced that the demise of Uday and Qusay was what was moving the market.
Soaring energy costs - the price of oil is up more than a quarter over the past two months - have accompanied massive buying of oil futures by investment funds, meaning some profit-taking was only to be expected.
And prices in Asia crept back up early on Wednesday, ahead of the release of oil inventory data for the US due later in the day.
"I'm quite surprised at the logic," connecting the Iraq news to oil prices, one Singapore dealer told the AFP news agency.
"I think it's a bit stretched."
Iraq's oil potential
Production 2.48 million barrels a day in Feb 2003, compared with 3.5 million b/d in July 1990
Revenues Constitute 95% of Iraq's total revenues and expected to cover half of the revenues needed for 2003 budget
Reserves Second largest proven oil reserves of 112.5 billion barrels, although 90% of Iraq is largely unexplored; only 15 (21%) of the 73 discovered fields have been developed
Investment Iraq needs $4bn-5bn over two years to restore production to levels before the Gulf War; to increase oil production to 6 million-7 million b/d by 2010, Iraq needs $35bn-40bn over 10 years
Source: Global Investment House, McKinsey
The announcement that Uday and Qusay Hussein - two of the old regime's most feared leaders - were dead raised the prospect of faster progress in the effort to get Iraqi oil flowing again.
The price of crude oil in New York slid $1.59 to $30.19 a barrel on Tuesday night, having hit five-week highs earlier in the week, while London prices dropped $1.20 to $27.49.
"The news that Saddam's sons may have been killed gave traders a feeling that things would be a little bit more settled in that nation," Marshall Steeves, energy market analyst at Refco Energy Group in New York, told Reuters.
There have been frequent announcements that a full-scale return to oil exporting, and thus an inflow of badly-needed hard currency, is just around the corner.
But repeated attacks on pipelines and pumping stations have hampered the push to rebuild installations damaged by war and a dozen years of sanctions.
Arguments over who should share the spoils are also causing trouble.
Iraqis remain suspicious of US motives concerning the country's immense reserves, despite calls for privatisation from the likes of former Iraqi oil minister and energy commentator Dr Fadhil Chalabi.
Doubts
But not everyone was convinced that the demise of Uday and Qusay was what was moving the market.
Soaring energy costs - the price of oil is up more than a quarter over the past two months - have accompanied massive buying of oil futures by investment funds, meaning some profit-taking was only to be expected.
And prices in Asia crept back up early on Wednesday, ahead of the release of oil inventory data for the US due later in the day.
"I'm quite surprised at the logic," connecting the Iraq news to oil prices, one Singapore dealer told the AFP news agency.
"I think it's a bit stretched."
Iraq's oil potential
Production 2.48 million barrels a day in Feb 2003, compared with 3.5 million b/d in July 1990
Revenues Constitute 95% of Iraq's total revenues and expected to cover half of the revenues needed for 2003 budget
Reserves Second largest proven oil reserves of 112.5 billion barrels, although 90% of Iraq is largely unexplored; only 15 (21%) of the 73 discovered fields have been developed
Investment Iraq needs $4bn-5bn over two years to restore production to levels before the Gulf War; to increase oil production to 6 million-7 million b/d by 2010, Iraq needs $35bn-40bn over 10 years
Source: Global Investment House, McKinsey
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