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By Delphine Dechaux, Agence France-Presse
LONDON: An attack on a major oil pipeline in
southern Iraq caused a sharp spike in crude prices Thursday,
highlighting the underlying tensions in the market amid fears over
tight global supplies, analysts said.
One of Iraq’s two main oil export pipelines
near the southern city of Basra was bombed by saboteurs on Thursday.
The blast sent oil prices spiking above 107
dollars per barrel, within sight of the record high near 112 dollars
set last week.
The pipeline transports crude oil from the
Zubair oil field to the Al-Faw storage facility from where it is
exported.
Lost production could total just 130,000 barrels
of oil over the coming days as the facility is repaired but analysts
fear that lower Iraqi exports could push prices back into record
territory.
“This is the largest pipeline feeding the
Basra export terminal and the incident will likely result in a
severe disruption to Iraqi export flows,” warned analyst Kevin
Norrish at Barclays Capital.
In Iraq, heavy fighting erupted Thursday in a
bastion of Shiite cleric Moqtada al-Sadr’s militia in Basra as
Iraqi government operations against gunmen in the southern oil city
entered a third day.
Historically, two-thirds of Iraq’s oil output
has come from southern fields and flowed through Basra. In February,
1.54 million barrels of crude per day came from the city, according
to data from the Iraqi oil ministry.
“These latest developments further reinforce
our view on the tenuous situation in Iraq and the upside risk to
prices remains wide open as a result,” Norrish said.
“The unresolved geopolitical issues in Iraq
could potentially play an even larger role, given that the reduction
in global crude inventories and spare capacity has left a low buffer
to supply shocks.”
Samuel Ciszuk, analyst at the Global Insight
consultancy, said Iraq’s energy infrastructure was always a
vulnerable target for insurgents.
“Of course, in southern Iraq there was never
this kind of level of violence as we see now lately, so there is a
clear problem,” Ciszuk told AFP.
“The threat is clearly higher, although of
course the pipelines have always been very vulnerable.”
According to Ciszuk, the Zubair field is not a
key Iraqi oil field and produces about 130,000 barrels of crude oil
per day. He added that the pipeline damage would probably take about
2-3 days to repair.
“So if there won’t be any more successful
attacks, and they can actually fix the pipeline within two or three
days, the actual shorfall in Iraqi exports might not be especially
noteworthy,” Ciszuk added.
However, if Iraqi oil terminals were hit by
saboteurs, then exports would be more severely affected, he warned.
In recent weeks, prices have scaled historic
heights as traders sought shelter from the plunging US dollar and
choppy stock markets.
The market is also being driven by soaring
energy demand from China and India, and ongoing supply threats in
crude producers like Iraq and Nigeria.
New York’s light sweet crude hit a record
intraday high of 111.80 dollars on March 17.
“There are so many factors (influencing the
oil prices) but the Middle East is always closely watched and for
the coming days, this is one of the main security fear issues right
now,” Ciszuk said.
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