Oil surges after blast destroys Iraq pipeline

Oil rose above $106 a barrel today after saboteurs blew up a major pipeline in Iraq, cutting exports from the south of the country, and also because of strength in heating oil futures.
The attack on the pipeline in southern Iraq came on the third day of an Iraqi military operation against fighters loyal to Shia cleric Moqtada al-Sadr in the oil port of Basra.
“Today’s action was driven up by the explosion and catching fire of a pipeline in Iraq,” said Nauman Barakat, oil trader and and senior vice-president at Macquarie Futures USA. US crude was up $1.05 to $106.95 a barrel by 1630 GMT, having earlier risen as high as $107.70. London Brent crude added 56 cents to $104.55.
Crude was also pulled up by heating oil, which rose almost 2 per cent. Traders said a force majeure declaration by South Korean refiner S-Oil for April loadings of oil products had in part prompted the gain.
In Iraq, officials said efforts were under way to get shipments back to normal. It is the first time since 2004 that the southern supply route has been disrupted.
“This morning saboteurs blew up the pipeline transporting crude from Zubair 1 by placing bombs beneath it. The pipeline was severely damaged,” a Southern Oil Company official said. “Crude exports will be greatly affected because this is one of two main pipelines transporting crude to the southern terminals.”