Oil falls as OPEC pledges supply

OPEC has pledged to make good any oil shortfall from the attack on Iraq. Story Tools

LONDON (Reuters) -- Oil prices fell Thursday as the Organization of Petroleum Exporting Countries said it would make up for any oil shortage from the attack on Iraq, using spare output capacity to ensure supply continuity

In Asia, oil prices tumbled more than $1 to three-month lows after the attack on oil exporter Iraq began, with dealers betting on a swift coalition victory that causes little disruption to Middle East crude flows.

OPEC President Abdullah al-Attiyah of Qatar said he had spoken with members of the 11-strong cartel following the start of the U.S. attack on Iraq.

"As a result of those consultations, I am herewith reiterating OPEC's resolve to make up for any supply shortfall resulting from developing events," he said in a statement carried on OPEC's official news agency.

"To this end, member countries have pledged to use, in the interim, their available excess capacities to ensure continued supply."

The OPEC producers' cartel pledged to fill any gap in supplies due to hostilities in the oil-rich Middle East, while the International Energy Agency said it was closely monitoring events to see if it would be necessary to release emergency stocks.

In Asian trade Thursday, U.S. light crude fell $1.83 to $28.05 a barrel, while London's Brent crude dropped $1.25 to $25.50.

"Prices have come down because the (timing) uncertainty is gone. The start of the war just means the end of the war is closer," David Thurtell, commodities strategist at Commonwealth Bank in Sydney, said.

"Prices always overshoot when you have a big move, so you can easily see oil come down to $26, $27 a barrel before buying pressure comes back in."

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," Pyne said.

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