Oil prices slump as Iraq complies

Oil prices fell on Monday as dealers speculated US plans for war on Iraq might be put back after Baghdad began to destroy missiles and agreed to submit a report on stocks of biological warfare agents. And in a setback to Washington’s military preparations, Turkish leader Tayyip Erdogan held out little hope that his country’s Parliament might reconsider a narrow vote to bar US forces from using Turkish soil to launch an attack.

US light crude in electronic trade fell 75 cents to $35.85 a barrel, extending Friday’s 60-cent loss in New York. In London, Brent crude dropped 58 cents to $32.21 a barrel. Profit-taking on US crude has pulled prices sharply down from last week’s 12-year peak of $39.99 a barrel. “The pendulum of market sentiment appears to be focused on a delay to a military strike, which will erode the war premium,” said independent oil analyst Simon Games-Thomas in Sydney. The United Nations said on Monday that Iraq would submit a new report on VX nerve gas and anthrax stocks in a week’s time as part of a drive to avert a possible US invasion.

Oil market worries that war could do more than knock out Iraq’s 1.7 million barrels a day of exports were underlined when Kuwait said it would have to shut up to 400,000 barrels a day of production if hostilities start. The Kuwait Oil Company said it would shut its northern oilfields near the Iraq border as a safety precaution.