Oil below $25 after Iraq lifts embargo

Brent crude oil skidded lower on Tuesday after Iraqi President Saddam Hussein’s Sunday decision to lift a ban on his country’s oil exports. London Brent futures slumped 95 cents to $ 24.80 a barrel after Saddam said Iraq would end a month-long self-imposed embargo on crude sales on May 8. US Light crude futures slipped 22 cents to $25.92 after a 50-cent fall on Monday. The unilateral Iraqi ban, imposed in protest against Israeli military action in Palestinian territory, had removed nearly two million barrels per day from world supplies.

The end of the embargo undermined any bullish expectations of a draw in stocks in a weekly report from the American Petroleum Institute (API) on US fuel inventories which are expected to show a two million barrel fall in crude inventories.

The API figures are used by the industry as a gauge of any shortfall or surplus in supplies at a time when US refiners are gearing to build gasoline stocks to meet peak summer demand. Last week’s report showed a huge 7.62 million barrel rise in crude stocks.

Story continues below this ad

Despite early losses, market players expected the price fall to be limited.

‘‘The really difficult part to assess is how much risk premium remains in the market because of the Middle East situation,’’ said Lawrence Eagles of brokers GNI. ‘‘Nobody is foolish enough to believe that the current lull represents the end of violence in the region.’’

The Iraqi issue is also likely to weigh as the United Nations Security Council will vote this week on revisions to the oil-for-food programme.