Iraq's call for crude oil embargo goes unheeded

LONDON -- Oil prices retreated Tuesday as Iran and Libya held back from joining Iraq's suspension of crude shipments to countries allied with Israel.

OPEC Secretary-general Ali Rodriguez said the oil producers' group is opposed to an oil embargo, and some analysts expected Saudi Arabia and other moderate OPEC members to quietly boost their output to cover any serious shortfall in global supplies.

The incentive of higher oil prices might encourage non-OPEC producers such as Russia and Mexico to do the same, analysts said.

Signs of a partial Israeli withdrawal from Palestinian territories also helped to calm futures markets, a day after Iraq's cutoff triggered a 6 percent surge in prices. Markets seemed initially to shrug off a flare-up in fighting Tuesday in which at least 13 Israeli soldiers died.

The European Union's head office said it was convening a special meeting later this week to discuss rising oil prices.

However, the European Commission played down fears of a looming world fuel emergency.

Prices for May contracts of Brent crude futures slipped by 92 cents a barrel to $26.10 in late trading in London. May contracts of light, sweet crude eased 71 cents lower to $25.83 a barrel in New York.

Iraqi President Saddam Hussein announced Monday that he was halting oil exports for 30 days or until Israel withdrew from the territories. A political dispute at Venezuela's state-run oil company exacerbated the turmoil.

No word from Iran

Markets took comfort in the absence of any action or statement from Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, in support of Iraq's embargo. Iran, together with Libya, had earlier expressed sympathy for the idea of using oil as a weapon against Israel's allies, chiefly the United States.

"At the moment, the Iranians value their revenue from oil far more than they do support for Iraq or the Palestinians," said Ali Tahghighi, an analyst at Barclays Capital.

Iraq was the fifth-largest supplier of imported oil to the United States in January, shipping nearly 1 million barrels a day, according to the Department of Energy's Energy Information Administration.

OPEC's Rodriguez said the group saw no reason to take any action.