Oil prices tumbled by more than $1 to three-month lows today after the United States began a war on oil exporter Iraq.
US light crude fell $1.35 to $28.53 a barrel, while London's Brent crude dropped $1.02 to $25.73 a barrel.
Dealers are predicting a swift US victory with little disruption to Middle East crude flows.
The OPEC producers' cartel pledged to fill any gap in supply due to war in the oil-rich Middle East.OPEC President Abdullah bin Hamadal-Attiyah repeated today after the start of the war against Iraqthat the oil-producing organisation was ready to make good anyshortage of oil to the market.
The West's energy watchdog, the International Energy Agency (IEA), said it saw no reason to release emergency stocks.
Hours after US jets began a dawn raid of Baghdad, officials in nearby Saudi Arabia and Kuwait said crude production continued normally, and shippers reported no interuptions to tanker movements.
"Prices have come down because the uncertainty is gone. The start of the war just means the end of the war is closer," said Mr David Thurtell, commodities strategist at Commonwealth Bank in Sydney.
But Mr Geoff Pyne, consultant to Sempra Energy, said there were still potential dangers ahead that could cause crude to shoot higher.
"Most obviously, there is a danger that Saddam may blow up the Iraqi oilfields, either as a defensive measure, or to deny them to the United States. Even if this doesn't happen there is a high chance of at least a month of missing Iraqi exports," Mr Pyne said.