One barrel of Brent crude oil, which is the market's benchmark, was last traded on Monday at $9.76, even though at one point the price fell as low as $9.55 per barrel.

Petrodollars don't buy very much anymore

This is the lowest oil price since 1986. Looking at the average for the whole year, prices are even below the level of 1976.

When the American and British air strikes began, prices had briefly risen because of fears that the allied forces could hit oil installations. Furthermore the Iraqi government had threatened to stop the flow of oil should the West attack.

However, the flow of oil was uninterrupted. The allied forces attacked only one oil installation south of Basra, which they said had been used to contravene the UN oil embargo agaionst Iraq.

Christopher Bellew of Prudential Bache International in London reported: "Iraq loadings are normal, while on the political side support for the US and UK positions on Iraq is melting away, and that could point to renewed pressure for a lifting of sanctions."

Iraq is currently allowed to export a maximum of 1.8m barrels per day under a United Nations programme to supply food and medicine paid for with oil revenues.

The oil market is depressed because of an over-supply of oil. The economic crisis in Asia has forced down demand for petrol and other oil products. At the same time the winter in the northern hemisphere has been relatively mild.

Only drastic production cuts could now boost the market. However, some oil-producing countries are short of money and have increased sales in order to balance their budgets.

Tony Machacek, analyst at Credit Lyonnais Rouse, said: "It is difficult to see who is going to come on to the market and support prices" as there were "no signs of Opec (Organisation of Petroleum Exporting Countries) whishing to make any cutback" to production levels.