Petroleum Markets: Crude in Full Retreat

Oil prices collapse as fears of a supply cutoff give way to the recognition that a glut exists

Oil experts call it the "war premium." For the U.S., heightened global anxiety about the security of Persian Gulf crude supplies has imposed an extra cost of more than $20 billion in higher oil prices since Iraq invaded Kuwait last August. The burden, acting like a new tax, helped push the U.S. into recession and put a drag on sluggish economies around the world. With every new rumor out of the Persian Gulf, the war premium swung menacingly. The gyrations gave rise to a frightening question: How high would oil prices skyrocket if fighting actually broke out -- $50 or even...

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