Business Notes OIL

When Iran and Iraq decided to end their eight-year war, oil producers hoped that a new spirit of unity in OPEC would lead to a boost in crude prices. But the cartel is still fueled more by friction than by fellowship, and oil prices are plunging. Last week the cost of West Texas Intermediate, the benchmark grade of U.S. crude, dropped 4%, to $14.18 per bbl. -- its lowest level in nearly two years. Reason: although OPEC agreed last month to hold daily output to 15 million bbl., some 20 million bbl. are flooding the market each day. Among those exceeding their quotas are Iraq, Kuwait, Saudi Arabia and the United Arab Emirates. If Iran and Iraq forge a lasting peace, analysts believe both countries could boost their production levels still more.

That could be good news for consumers. If crude-oil output remains high and prices stay down, gasoline and heating oil will eventually cost less. But it will take at least two months for the benefits of OPEC's overproduction to trickle down to the retail level.