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OPEC is scrambling to pull oil prices out of their steepest plunge in 3 years, and market signals are decidedly mixed.
After key market prices slipped below $16 last week, OPEC said it will hold an emergency meeting in Vienna July 28 to "discuss the current soft state of the international oil market."
Concerns that Iraq and the U.N. were close to an agreement sanctioning Iraqi oil sales slashed the OPEC marker to $15.46/bbl at July 16 close. Brent fell below $16/bbl the first time since before the Persian Gulf war, reaching as low as $15.90bbl July 19. This followed news of Iraq's acceptance of U.N. inspections of missile test sites, which now is seen as a prelude to approval of oil sales to fund relief work in Iraq and eased fears of more U.S. air strikes. U.N. officials earlier insisted there is no link between the two issues but backpedaled after the Sec. Gen. Boutros Boutros-Ghali apparently did just that in public comments.
U.N. officials remain suspicious of Iraqi intention but said a new team of weapons inspectors was to go to Iraq late last week.
"The possibility of an agreement between Iraq and the U.N., leading to the return of Iraqi oil exports to the world market in the near future,has added to the psychological pressure on prices," said OPEC.