World oil prices tumbled yesterday to the lowest in almost four years after United Nations Secretary-General Kofi Annan reached an agreement with Iraq over weapons inspections.
The accord appears to avert the threat of a US military strike, removing the possibility of a cut in Iraqi oil exports. "This seems to have erased the war premium for oil," says Peter Gignoux at Salomon Smith Barney in London.
Brent crude, the world benchmark, sank to $14.08 per barrel Monday. Oil prices have fallen by more than a third since October on a mix of poor Asian demand, full storage tanks, and mild winter weather in the Northern Hemisphere. Also nudging prices down is the prospect of more Iraqi oil. The UN Security Council agreed Friday to more than double the amount of oil Iraq can sell under a UN oil-for-food deal.