| Oil prices rise after more terror attacks Original Source Link: (May no longer be active) http://www.forbes.com/business/energy/2004/06/16/cx_pm_0616iraqoil.htmlhttp://www.forbes.com/business/energy/2004/06/16/cx_pm_0616iraqoil.html
Oil Prices Rise As Traders Reassess Forbes.com staff, 06.16.04, 8:13 AM ET
NEW YORK - Oil prices bounced back today as traders reassessed a wave of attacks on Iraq's oil industry that has brought the country's oil exports to a halt and left a senior oil industry official dead.
On the London futures markets, the benchmark crude for July rose 21 cents to $37.40. It fell 40 cents in New York trading June 15 as traders took profits from a rally spurred by the first reports of the attacks.
Crude hit a peak $42.45 on June 1.
Iraq's oil minister, Thamir Ghadhban, told the Reuters news agency that blasts on June 14 damaged the country's main pipeline from its southern oilfields to its Persian Gulf terminals, at Basra and Khor al-Amaya,
The bulk of Iraq's oil exports, which provide 90% of the country's own revenue, flow through these two terminals.
This was the second attack in five weeks on the pipeline into Basra. The previous attack on May 9 slowed, but did not sever, the flow of oil.
Iraqi officials confirmed June 15 that the latest attack had halted exports as an antiquated backup pipeline failed to cope with the additional pressure.
Repairs to the main pipeline are estimated to take ten days. Iraq is thought to earn $60 million per day from oil exports that have been running at 1.6 million barrels per day through Basra and Khor al-Amaya.
The previous attack cut exports from the two terminals to 1 million barrels per day for two weeks.
Earlier this month, interim Iraqi Prime Minister Iyad Allawi, said pipeline sabotage had cost the country more than $200 million in lost revenue over the past seven months.
The pipeline from Iraq's northern oil fields to Turkey has barely been in operation in the past year because of repeated sabotage.
On June 15, a stretch of the pipeline between between Dibis and a pumping station near Kirkuk was blown up, and the security chief for the northern fields, Ghazi al-Talabani, was shot dead in Kirkuk.
The International Energy Agency says total Iraqi oil production in May was at 2.1 million barrels per day, 700,000 barrels per day below capacity. Iraq's peak oil output, in 1979, was 3.7 million barrels per day.
The country has the second-largest oil reserves after Saudi Arabia, but its oil infrastructure was badly damaged in the first Gulf War and has been starved of investment since.
The relatively sanguine reaction of markets to this latest disruption to Iraq's oil exports reflects a growing perception that the tight supply situation is easing, and of a winding back of speculative positions held by hedge funds.
Today's release of the weekly U.S. commercial crude inventories report is expected to show a further increase in both crude and gasoline stockpiles. Meanwhile, the Commodity Futures Trading Commission says net long positions--bets that prices will rise--have fallen from 65,287 contracts to 36,411.
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