The price of crude continued its steep decline, falling below 29 dollars a barrel in midday trade Wednesday, after promises of more oil from Saudi Arabia, the world's largest producer nation.
The price of benchmark Brent crude shed a further 78 cents to 28.80 dollars a barrel.
The day before, Brent fell 1.52 dollars a barrel to 29.58, while the New York market was closed to mark the Independence Day holiday.
Meanwhile, political reaction continued to flood in following Saudi Arabia's surprise announcement late Monday that it would pump an extra 500,000 barrels of oil per day unless prices fell of their own accord.
Saudi Arabia's oil minister Ali Nuaimi added that he was seeking a price level of 25 dollars a barrel for the reference basket of Organization of Petroleum Exporting Countries (OPEC) crudes.
An official Iraqi newspaper on Wednesday accused Saudi Arabia of looking to hurt the interests of OPEC members.
"The Saudi decision is an example of irresponsible behavior aimed at hurting the interests of the member countries of OPEC," charged Babel, run by the eldest son of Iraqi President Saddam Hussein.
In Mexico, president-elect Vicente Fox took a more conciliatory line, saying he would maintain a cautious oil policy to ensure high crude prices do not damage Mexico's export markets.
"We have to be cautious not to raise oil prices excessively, because we would end up paying the price ourselves," he said at a news conference.
Meanwhile, Saudi Arabia was said to be seeking to repair relations with Iran and Iranian oil minister Bijan Zangeneh said Nuaimi had assured him any output increase would be taken within the OPEC framework, not unilaterally.
At the OPEC meeting in June, Iran and Saudi Arabia appeared to be enjoying improved relations and the meeting resulted in a decision described as "a compromise" to increase production by a modest 708,000 barrels a day (bpd) - LONDON (AFP)
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