Crude oil prices slid to 2 1/2-month lows Tuesday as the United Nations Security Council sought agreement on a resolution authorizing the return of weapons inspectors to Iraq for the first time in four years.
“The slow-moving diplomatic efforts are taking away the immediacy of an attack” on Iraq by the United States, said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. “This is helping take away some of the war premium that’s propped up prices.”
Crude oil futures for December delivery fell 43 cents to end at $26.86 a barrel in New York. That’s the lowest price since Aug. 9, and is down 13% from the peak of $30.83 reached Oct. 1.
Hans Blix, the chief U.N. arms inspector, favors a U.S. provision that calls for “serious consequences” if the Iraqis don’t cooperate with the search for weapons of mass destruction.
France, Russia and China want a chance to evaluate the inspections before authorizing military action.
“The United Nations realizes it’s decision-making time,” White House spokesman Ari Fleischer told reporters. Fleischer said while the U.S. “doesn’t rule out” a Security Council vote next week on the U.S.-sponsored resolution, the Bush administration has set no deadline.
Oil prices still are up 35% this year partly on concern that an attack on Iraq would disrupt exports from the Persian Gulf.
“We have a lot of politics and tension in this market,” Bijan Namdar Zanganeh, Iran’s oil minister, said at a conference in Tehran. “Based on the fundamentals, we have no shortage in the market,” he said. “In fact, we have oversupply.”