The price of crude oil slipped Friday despite Iraq's decision to suspend exports as traders expected the gap would be filled by Saudi Arabia and US emergency reserves if necessary.
In New York, the price of January light sweet crude fell $1.80 to $32.02 a barrel from $33.82 a day earlier.
Benchmark Brent North Sea crude oil for January delivery was selling for $31.42 a barrel in late London trade, from $31.88 at the close on Thursday.
The United Nations confirmed reports on Friday that Iraq had stopped exporting oil through the only two outlets it is allowed to use under the UN's sanctions regime.
The market has been listening closely to noises from Baghdad, which is arguing with the United Nations over a new pricing surcharge that effectively violates the 10-year embargo on Iraq.
The White House said meanwhile it is working with the International Energy Agency on a response to the suspension of Iraq's oil exports.
"We are working (with) the IEA on a response to that, and are ready for any eventuality, and we will take action as the circumstances warrant," White House press secretary Jake Siewert said.
Siewert added that a drawdown from the US strategic petroleum reserve could be an appropriate measure if the Iraq suspension drags and deemed critical enough.
Iraq is a key world crude exporter. Its 2.4 million barrels a day amount to as much as five percent of global oil exports -- volumes desperately needed to cool a feverish market which has been short of oil this year. Dwindling world crude stocks have sent prices to 10-year high points in recent weeks.
But a new price spiral did not materialize on Friday, because the market had already factored in a halt in Iraqi exports and was hoping that the shortfall could be made up by supplies from elsewhere.
Saudi Arabia has pledged to step into the breach and although it will struggle to fill in the Iraqi export volumes, the United States has further vowed to dip into its strategic petroleum reserve to ensure there are no shortfalls.
"People in the market were expecting a complete halt (in Iraqi exports) from midnight last night," said Lawrence Eagles, an analyst with the GNI brokerage.
In Paris, the International Energy Agency played down the importance of the Iraqi oil cut.
"This possibility has been much discussed and will come as no surprise to the market," said IEA executive director Robert Priddle in a statement. "Major oil producers have declared their readiness to act to meet any serious shortages."
Some oil-producing countries held significant stocks in Europe, the Caribbean and elsewhere, close to the major consuming regions, while Iraqi shipments took 10 to 30 days to reach their destinations, he added.
The IEA reaffirmed its readiness to take swift action, with security stocks in IEA member countries available to offset any serious breaks in supply.—AFP
©--Agence France Presse
© 2000 Mena Report (www.menareport.com)