World oil prices fell on Tuesday as the United States and Britain delayed a UN Security Council vote on a deadline for Iraq to disarm or face war and Saudi Arabia pledged to ensure there would be enough oil.
US light crude slipped 33 cents to $36.94 a barrel, below its recent peak 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 37 cents to $33.32 a barrel.
Traders were awaiting the outcome of a meeting of the Organisation of the Petroleum Exporting Countries in Vienna scheduled to begin on Tuesday.
The meeting was expected to stop short of endorsing a mooted plan to allow members to pump oil at will and to instead maintain existing output limits of 24.5 million barrels daily.
But the cartel was also expected to signal its intention to ensure supply in the event of a disruption.
As the market awaited, traders said that on Tuesday prices might weaken, but not for long.
"Prices might come off a little bit, but it will be short-lived," said Rob Laughlin of GNI-Man Financial.
Laughlin said OPEC was anxious to avoid oversupplying the market amid widespread predictions that a possible war in Iraq would cause a brief spike in prices, followed by a collapse provided any war was short.
"They don't want to go from a boom to bust scenario. They don't want to go from high prices to a sudden collapse. They want to have an orderly market," he said.
Little to spare
Saudi Oil Minister Ali al-Naimi said on Tuesday his country had production capacity to spare and promised the world market would not run short of oil in the event of war in Iraq.
But Naimi said he saw no reason to suspend OPEC output limits and said OPEC without quotas would be "chaos".
"We will make sure there is enough oil in the market," he told reporters. "There will be no shortage of oil."
Naimi said OPEC was producing at its output ceiling of 24.5 million barrels per day, but declined to comment on the current level of production from Saudi Arabia, the only OPEC member with significant scope to pump more oil.
Behind the scenes, Saudi Arabia has made clear it is prepared to pump at maximum levels, with or without OPEC backing. Riyadh has lifted output sharply in recent weeks and is now pumping more than nine million barrels per day of its 10.5 million bpd capacity.
At the same time, the countdown for a war on oil producer Iraq appeared to have slowed.
A draft UN resolution proposed by the United States and Britain has set a deadline of March 17 for Iraq to satisfy all Security Council resolutions that it was cooperating fully with disarmament demands, or face war.
But with France and Russia threatening a veto, the United States and Britain were prepared to delay a UN Security Council vote possibly until Thursday or later, diplomats said.
The vote had previously been expected to take place on Tuesday.
US President George W Bush has threatened to go to war to remove Iraqi President Saddam Hussein with or without UN support.
French President Jacques Chirac raised the stakes on Monday, saying France would veto the planned resolution setting Iraq a March 17 deadline.
Russian Foreign Minister Igor Ivanov has also said Moscow would vote against any resolution authorising war.
