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Oil rises after sabotage cripples exports
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Oil rises after sabotage cripples exports
US oil prices rose yesterday, spooked higher by sabotage attacks that stopped Iraq?s crude exports and the assassination of a senior official running the country?s northern oilfields.
Worried already high prices could rise further, the head of OPEC said he would call on producers outside the cartel to raise global supplies to cool prices, which have held stubbornly above $35 a barrel.
US light crude climbed 26 cents to $37.45 a barrel, while London?s Brent crude rose three cents to $35.06 a barrel.
?Iraq?s exports were about 1.6 million barrels a day, that?s what I guess the world?s spare capacity to be at the moment. So there?s no fat left, there?s no room for error, accident or more attacks,? said David Thurtell at Commonwealth Bank of Australia.
Iraqi crude exports have ground to a halt after a series of sabotage attacks this week on pipelines in the north and south of the country that feed Iraq?s only export terminals. ?There are no exports from Basra oil terminal or Khor al-Amaya and it is unclear when they will restart,? an Iraq oil official told Reuters. ?Both pipelines feeding the terminals have been destroyed.?
Iraq was exporting more than 1.6 million barrels daily from the southern ports, most of which was loaded at the Basra terminal. Sabotage was also blamed for an explosion on Tuesday at a pipeline in the northern Kirkuk oilfields. In another blow, Iraqi police said on Wednesday that gunmen killed Ghazi Talabani, a senior official in Iraq?s North Oil Company.
Fears that militants will strike at oil facilities in the Middle East have helped stoke high prices this year. Robust economic growth and strong oil demand, especially in the United States and China, have left little room in the supply chain for any disruption.
OPEC seeks help
OPEC president Purnomo Yusgiantoro said on Wednesday he would send letters to request that Russia, Angola, Mexico and Oman pump more crude. ?They have spare capacity to increase production,? Purnomo, who is also Indonesia?s oil minister, told reporters. He did not elaborate.
The 11-member Organisation of the Petroleum Exporting Countries agreed earlier this month to increase formal supply limits by two million bpd from July 1 and by another 500,000 from August 1 to calm oil prices, which hit 21-year highs above $42 a barrel earlier in June.
Tanker tracking consultancy Petrologistics reckons the 10 core members of OPEC, which excludes Iraq, will lift supplies by 800,000 bpd in June, before the increase to formal limits next month. Petrologistics estimates OPEC 10 output for June at 27.4 million bpd, just 500,000 bpd short of what the International Energy Agency (IEA) says is the group?s sustainable capacity. Thurtell was doubtful many non-OPEC producers had any significant spare capacity. ?I suspect that countries like Mexico and Russia are producing as much as they can at the moment,? he said.
Russian officials have said that only a modest boost to exports is possible in the medium term after several years of strong growth, while Mexico aims to increase crude exports to 1.95 million bpd from 1.88 million bpd later this year.
Tanya PANG
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