Oil Market Unruffled

Fears apparently were unwarranted that U.S.-led air strikes against Iraq would raise world crude oil costs and disrupt the record low diesel prices trucking has been enjoying.

The four days of military attacks by the U.S and Britain did drive up prices briefly, but they quickly fell to 12-year lows when the strikes ended with Iraq’s oil-exporting capability intact.

“There was a blip for about a day — almost a dollar a barrel — but now, oil prices are below where they were on Dec. 1,” said Ron Planting, an analyst with the American Petroleum Institute. “It seems there was no net effect at all, and what that really shows is that we have a world market now that’s soft enough that even military strikes in Iraq seemed to have only a minor, momentary effect.”

The air strikes were targeted at military sites. Iraqi exports of crude oil under the United Nations’ oil-for-food program were continuing normally on Dec. 21, the day after the missile attacks ended.

More good news came out of a meeting in Madrid of some of the world’s biggest oil producers.

Earlier this year, the oil ministers of Saudi Arabia, Venezuela and Mexico talked oil producers into promising production cuts of 3.1 million barrels a day to reduce the market glut. At the most recent meeting, the ministers called for greater compliance with the promises but did not suggest any further production cuts.

“They basically just came out and said we’re going to keep on doing what we were doing,” said Mr. Planting. “In terms of any other future agreements to reduce production further, I haven’t seen anything.”

With the Iraqi situation defused for now, an excessive supply of oil on the market and no signs of production cuts, diesel prices are expected to remain near 20-year lows.

“Diesel prices are down 16% from a year ago based mostly on these low world crude oil prices,” said Mr. Planting.