Oil prices dip as war looms, Opec gathers

World oil prices dipped yesterday as the United States and Britain struggled to convince wavering nations to back a UN resolution that would pave the way for war on Iraq.

Supporting prices was an emerging split in the Opec group, which meets today, over plans to suspend output limits should the United States attack Iraq.

Iran said it opposed a bid by Western-friendly Opec states for a policy that Tehran says implies support for a U.S. attack, by controlling fuel costs.

U.S. light crude slipped 42 cents to $37.36 a barrel, below its recent high of $39.99. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell was down 20 cents at $33.90 a barrel, below a session high of $34.55, its highest level since November 2000.

Oil prices are up 20 per cent so far this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

Saudi Arabia and Kuwait had hoped to find backing at today's meeting to set aside production quotas if war prevents Iraqi deliveries.

Meanwhile, Obeid bin Saif Al Nasiri, UAE Minister of Petro-leum and Mineral Resources, held a series of meetings with Opec and non-Opec Oil Ministers to review the current developments in the international oil market, including a contingency plan in the event of a war and a possible halt of Iraqi oil exports.

The success of the plan will depend largely on Saudi Arabia and the UAE.

Nasiri said that it was natural for Opec to make for any shortfall in supplies which may result from the cut of supply from any of its sources. "But this would largely depend on the adverse effect the war may have on the market," he said, adding that many opinions are now on the table for discussions.

U.S. Energy Secretary Spencer Abraham said the United States was prepared to release crude from emergency reserves in the event of supply disruption, but that a decision to release stocks would only be made in the event of a supply emergency.