Oil sheds 3% as Annan pleads for extra time

Oil prices fell 3 per cent yesterday as UN Secretary-General Mr Kofi Annan called for more time for weapons inspectors to search Iraq before the US makes a final decision on going to war. Signs that the Venezuelan government of President Hugo Chavez is wearing down an eight-week old nationwide strike that has slashed oil exports also helped undermine prices. US light crude fell 99 cents to $32.29 (€29.77) a barrel and London Brent was 63 cents lower at $29.86 a barrel. The falls took US prices arou

Prices are still up 30 per cent from mid-November on concerns that war in Iraq could upset supply from the Middle East while Venezuelan production is curtailed. An Arctic blast across the eastern US in the past fortnight has bolstered prices by lifting heating demand. Prices fell as chief UN weapons inspector Mr Hans Blix was unable to corroborate US claims that Baghdad had rebuilt its weapons of mass destruction arsenal, saying he could not give a verdict one way or another.

"What's driving the timetable for war is not diplomacy but military readiness," said Mr Roger Diwan of consultancy PFC Energy in Washington. "If the US needs more time to get the military in place it will use that time to seek diplomatic backing but, whether it gets that or not, we still expect war to start some time between mid February and early March."

The world's biggest oil exporter Saudi Arabia said during the weekend that it and fellow OPEC members were pumping sufficient volumes to prevent shortages. "There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil Minister Mr Ali al-Naimi told a panel at Davos. "We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said