Eric Watkins
Senior Correspondent
LOS ANGELES, Mar. 27 -- Saboteurs in Iraq, apparently loyal to militant leader Moqtada al-Sadr, severely damaged a pipeline that carries oil from Zubair field to the Al-Faw storage facility in the southern city of Basra.
An official of Iraq's state-owned Southern Oil Co. said crude exports through Basra would be disrupted by as much as one-third as the line is one of two that transport oil to the export terminals. Iraq exported 1.54 million b/d from Basra in February using the two lines.
Iraqi officials did not speculate on how long it would take to repair the pipeline.
Concerned by the effect on his country's oil exports, however, Iraqi Prime Minister Nuri al-Maliki gave militants loyal to al-Sadr 72 hr to surrender after intense fighting in Basra and Baghdad.
The Iraqi government launched a major military operation in Basra Mar. 25, targeting districts of the city where the militiamen loyal to al-Sadr have a strong presence. The violence has killed more than 130 people and sparked angry protests and violence in Baghdad, as well as Basra.
Meanwhile, Robert Laughlin, a broker at MF Global Ltd., London, said the pipeline attack and related militia activity has dimmed hopes for long-term peace and steady oil supply, especially after traders had become accustomed to greater reliability from Iraq.
That view was supported by Mike Wittner, Societe Generale Group's head of oil research. Noting the volumes of oil at risk, Wittner said Iraqi exports have been steady for the last 6 months, so crude markets will feel their loss (OGJ Online, Mar. 27, 2008).
James Ritterbusch, president of Ritterbusch & Associates oil consultants, said oil prices could reach new record highs should the Iraq war heat up further.
Contact Eric Watkins at [email protected].