Oil prices fall as market calms

If one of the war aims was delivering cheap oil, then the US and UK can claim an early victory. The oil price, which was touching $38 a barrel in New York only 10 days ago, ended the week at just $24.40 a barrel in London, an astonishing 36 per cent decline.

So what has changed? The first thing is that uncertainty about when the war would start has disappeared from the market. "There is a 'buy the rumour, sell the fact' factor now the war has started," said Robert Laughlin, an oil trader for City brokers GNI.

Then there was Friday's news about allied forces securing the big Iraqi oil fields, which made traders feel comfortable that supplies were safe. That was what brought the price down more than $2 a barrel at the end of the week.

There were all sorts of calming noises coming from the oil industry's big guns: the Saudi Arabians. On Tuesday Saudi Aramco, the state oil giant, said it had stockpiled 50 million barrels of crude oil, and Saudi Oil Minister Ali al-Naimi said that Saudi Arabia will "ensure the supplies to the world under any circumstances". This statement was worth at least $1 a barrel fall all on its own.

Traders don't expect further falls in the price yet. Opec, the cartel of oil producers, has said it wants oil to trade at between $22 and $28 a barrel. If it falls below $22 it will turn off the taps, war or no war.