OPEC members were forced to hold an emergency meeting in Vienna last week to address the fall in price and agreed to cut production levels by two million barrels per day. The reduction was put forward to make sure prices would not fall below $US22 per barrel and was supported by all the members.

The world is now waiting for the moment when Iraq re-commences oil exports and what impact it will have on the markets. OPEC will not be overly concerned during the initial ramp up period, but as Iraq has the world's second largest oil reserves and is currently administered by a US government that is keen to see the break-up of OPEC, there will be some eager observers in the next few months.

However, it is estimated that it will cost up to $US12 billion to get the country's oil fields back to pre-1990 production levels, a bill the US might be loathe to cover up front following the blow out in war costs.