Oil prices could fall by 22% in 2004 as Iraqi output gathers pace

CRUDE oil prices, headed for their highest yearly average in two decades, may fall 22% in 2004 as Iraq recovers from the war and increases production, according to a survey of analysts by Bloomberg News.

Oil has averaged $31.03 a barrel on the New York Mercantile Exchange this year, the highest since 1983, when the contract began.

Prices are expected at $26.79 in the fourth quarter in New York and $25.34 in 2004, according to the average estimates of 20 banks, securities firms and consultants from Houston to Paris.

“There is still a long way to go before we see Iraq pumping at prewar levels,’ said Kevin Norrish, an analyst at Barclays Capital in London.

“But exports are rising slowly and we should see the industry fully up and running by early next year." Prices tumbled from a February high of almost $40 a barrel once the US began its invasion of Iraq in March.

They’re down 10% in the third quarter. Below-average US inventories and sabotage against pipelines and pumping stations in Iraq have kept prices above the average of about $19.70 seen in the 1990s.

Iraq was the No. 3 Middle East oil producer before the war.