Home > Attacks Halt Oil Exports From South Iraq
Oil Exports From Southern Iraq Halted Due to Attacks; Not Likely to Resume for a Week
Senior Iraqi oil officials said crude exports from southern Iraq were halted Monday because of attacks on pipelines, although some U.S.-based traders said other reports suggested that supplies were still flowing.
As a result, oil prices plunged by nearly $1 a barrel at the New York Mercantile Exchange.
Two senior officials of the South Oil Co., speaking Monday on condition of anonymity, said the southern pipelines were not likely to resume operations for at least a week. Iraq’s other export avenue, a northern pipeline to the Turkish Mediterranean port of Ceyhan, also carried no oil Monday, according to an oil official in Ceyhan. Those lines have also been repeatedly attacked.
Basra Gov. Hassan al-Rashid confirmed that oil exports in the south were halted completely Monday. "Yes, they are stopped," he told The Associated Press.
Al-Rashid said the country was losing $70 million a day because of the attacks on pipelines and oil fields. Oil flows out of Iraq’s southern pipelines account for 90 percent of the nation’s exports.
The latest strikes, which hit five pipelines linked to the southern Rumeila oil fields on Sunday, immediately shut down the Zubayr 1 pumping station, forcing officials to use reserves from storage tanks to keep exports flowing for several hours. The reserves ran out late Sunday, the South Oil Co. official said.
Energy traders in New York attempting to digest conflicting reports about Iraqi oil exports said Monday that what was most significant, perhaps, was the market’s initially muted reaction to news that exports had stopped. Rather than shooting up, prices only inched higher, suggesting that broader supply fears have abated somewhat.
Regardless of just how badly the oil flow has been hindered, "two weeks ago, with that news, we would have been up more than $1," said Tom Bentz, a trader at BNP Paribas Futures in New York. "The tide has definitely turned."
The job of guarding oil pipelines primarily falls to the U.S.-trained Iraqi infrastructure protection service, although some U.S. soldiers continue to be to be involved. But with about 4,350 miles of pipelines crisscrossing the country, officials concede there are many places for saboteurs to strike.
Nevertheless, oil prices fell as traders continued a selloff amid easing fears that disruptions in Iraq, Russia or Venezuela could cause a supply squeeze. October contracts for light sweet crude fell by 90 cents to $42.28 on Nymex well below peaks of over $48 a barrel in mid-August.