Oil prices held steady yesterday, guarding this week's sharp gains as analysts predicted that persistent fears of war on Iraq would prevent a major sell-off.
Brent crude oil for October delivery ended three cents lower at $26.99 (€27.77) per barrel in London, while US crude fell back by 21 cents to $28.63.
Earlier in the week, speculation of US military action against Iraq helped to push oil prices in New York above the $30-a-barrel mark to the highest level for 18 months.
In London, the rally was less spectacular, although Brent still managed to touch levels of well over $27, the highest since early April.
Tensions calmed slightly as US President George W. Bush said he would look at all options before acting against Iraq, although analysts predicted oil prices would remain strong.
"The biggest problem with the market at the moment, is that it's almost impossible to sell it," said Mr Andrew Hartree, director of commodities and risk finance at the Royal Bank of Scotland.
"The market responds to anything slightly jittery or bullish, but when that gets dispelled, the market does not really retrace. Until somebody actually goes and does something in Iraq, nobody really can sell."
Analysts have said there is a war premium in the market of $3-$5 as the world waits to see whether Bush's policy of "regime change" in Iraq will translate into military action.
A senior official in the world's top exporter Saudi Arabia said yesterday that there was no danger that Riyadh would abandon its role as oil market moderator.
