Forces secured more control over Iraq's southern oil region

What happens next depends largely on the course of the war.

From Kuwait to Suez, it's smooth and steady shipping executive

More fires and the possibility of a slowing down of the seemingly successful campaign in the first days could cause prices to reverse from its falls, analysts with the Energy Intelligence Group said.

In spite of the US-led attack on the world's seventh biggest exporter, oil supplies flowed uninterrupted from its direct neighbours Kuwait, Saudi Arabia and Iran.

Oil shipments from the Gulf were unaffected Saturday despite reports of blazing oil wells in southern Iraq, shipping sources said.

"From Kuwait to Suez, it's smooth and steady," said a London-based shipping executive.

Kirkuk

American and British forces on Sunday secured more control over Iraq's southern oil region as they started assessing how to restart exports from fields holding more than half the country's oil wealth.

But the northern oil hub Kirkuk was still in Iraqi hands on Sunday, in spite of Washington's goal to safeguard the country's billions of barrels of reserves on behalf of ordinary Iraqis.

Before war broke out, Iraq was exporting some 1.8 million barrels per day under supervision of the United Nations.

Nearly 60% of that volume was pumped out of the country's southern oilfields.

Steady falls

World oil prices dropped sharply last Friday as traders watched the US-led sweep across Iraq unfold, reflecting the view on the trading floor that the war will end quickly and the US will win.

The price of Brent crude oil - a benchmark for global petroleum markets, dropped $1.21 in New York to $26.91 a barrel, while over in London oil fell $1.15 to $24.35 a barrel.

Oil prices have shed nearly 30% of its value over the last week or so as the US-led attack on Iraq got under way.

The markets were on edge last week, and saw hefty swings after reports of the first Iraqi oil well fires.

On Saturday the Middle East Economic Survey said that the oil producers cartel Opec was ready to take "swift action in the coming days to correct an oversupply position."

It said the Organization of Petroleum Exporting Countries may see the need to "rein in supply quickly if US stocks build rapidly."

"However, if a resumption of Iraqi oil exports is delayed and there are output shortfalls from Opec members Nigeria and Venezuela, then the producer group will have to reflect on its options heading into the second quarter," the think tank said.

Post-war strategy

For its part, the US is reportedly already planning a strategy to get Iraq's vast oil resources flowing again once the war is over.

The Pentagon is reportedly in touch with some major oil industry service companies to repair any of Iraq's damaged oil wells.

Making it difficult to make an assessment of Iraq's oil resources is that very little is known about its oil infrastructure.

The last outside assessment was done three years ago, when it was said conditions were bad because of poor maintenance, neglect and pressure on oil managers to keep production as high as possible, oil experts said.