The price of oil fell in markets around the world on Thursday, from New York to London and Tokyo, as the long-awaited US-led war against Iraq began.

Front-month NYMEX April crude , which expires later on Thursday, was down $1.16 to a three-month low at $28.72 a barrel in electronic ACCESS trading.

The May contract was down $1.03 at $28.33 a barrel. Trading volumes for May were heavy, with 5,395 lots changing hands.

The losses added to a fall of $8 a barrel, or 21 per cent, in the past five days on expectations that a war on Iraq would be short-lived, and oil disruptions limited.

"I think we are seeing a lot of long liquidation. This comes from traders' experience at the time of the (1990-91) Gulf War when prices plunged after the United States invaded Kuwait," said Katsunori Watanabe, a trader at Japanese brokerage house Nihon Unicom Corp.

"Traders are convinced that their view is correct and the war will be over fairly quickly."

Explosions rocked Baghdad at dawn on Thursday and in Washington, U.S. President George W. Bush said the attack on Iraq had begun.

In off-hours trading on London's International Petroleum Exchange, May Brent crude futures fell 85 cents to $25.90 a barrel.

On the Tokyo Commodity Exchange, benchmark August crude was at 17,740 yen per kilolitre, down 1000 yen.

Oil products prices, such as gasoline and diesel, also fell sharply.

In products trade, NYMEX April gasoline was at 91.40 cents a gallon, down 2.85 cents, while NYMEX April heating oil was at 81.60 cents a gallon, down 2.01 cents.

The TOCOM said on Thursday it would suspend afternoon gasoline futures trading due to a system glitch. September kerosene was at 27,550 yen, down 1,050 yen.

US President George Bush on Monday gave Iraqi leader Saddam Hussein 48 hours to leave Iraq or face a U.S.-led invasion. Washington's deadline expired just after 0100 GMT on Thursday.

Iraq denies US allegations that it has stockpiled biological, chemical or nuclear weapons.