The trigger was news that the US was negotiating a UN resolution without the explicit use of force as a threat. In addition, a statement by the US Secretary of State, Colin Powell, that the Bush Administration was more interested in eliminating Saddam's weapons of mass destruction rather than "regime change" further exacerbated the slide.

"All we're interested in is getting rid of those weapons of mass destruction," Mr Powell said. "We think the Iraqi people would be a lot better off with a different leader, a different regime. But the principal offence here are weapons of mass destruction."

Analyst said the market was so intent on dropping the war premium that news of protests against President Hugo Chavez in Venezuela as well reports of a regrouping Al Qaeda could not put a floor under the oil price.