Oil prices continued to ease today, as Iraqi oil exports resumed without disruptions and the market warmed to assurances from Russian President Vladimir Putin that the troubles facing Yukos would not affect Russian oil exports.
In early trade in London, October-dated Brent futures were down 26 cents at $42.77 a barrel.
In New York, the new front-month October-dated futures contract was down 21 cents at $45.84 a barrel.
Softer crude prices help spur a positive start on the London stockmarket with the FTSE 100 moving up in morning trade.
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However, there remained concern over continuing unrest in Iraq. The AP news agency reported this morning that masked Shia militiamen armed with rocket launchers and automatic weapons had poured through the streets of the southern city of Basra, setting up roadblocks to protest US military action in Najaf.
Shia fighters loyal to the firebrand cleric Hojatoleslam Moqtada al-Sadr had until yesterday disrupted Iraqi oil output after threatening to target oil pipelines in the south of the country.
Analysts gave a guarded warning to recent developments. Steve Pearson and Naeem Wahid of HBOS said: “Politics in Venezuela look less fraught, Iraq is back at full capacity - for now - and Russian Premier Putin has assured the US that the Yukos affair will not affect Russian exports”.
These factors had combined to force US futures down by 5 per cent, or $3.50 a barrel since Friday’s record highs, they added.
Oil exports from southern Iraq are moving at a rate of 83,000 barrels an hour through two pipelines in the south, a South Oil Company official in the southern port of Basra told the AFP news agency.
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Meanwhile, a 15-minute phone call from President Putin to the US President George Bush, during which President Putin said oil companies in Russia would raise crude production, also helped to cool prices.