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Oil undersupply leads to price rise
( 2003-08-19 09:11) (Agencies)

Global oil prices rose yesterday after two fires over the weekend ended deliveries of crude through Iraq's Kirkuk export pipeline and as petrol buyers chased tight United States supplies.

New York Mercantile Exchange (NYMEX) September crude futures were up 31 US cents per barrel at US$31.36 while October Brent crude was up 39 US cents to US$29.20.

Petrol, which is in high demand during the United States summer driving season, led the market after a massive electricity blackout in North America last week closed seven refineries, threatening already thin supplies.

NYMEX petrol futures were up over US$1.00 per gallon and just below last week's peak, which was the highest since the start of the war in Iraq.

The US Government said last week that domestic petrol supplies were at an eight-month low.

A key export pipeline from Iraq's Kirkuk oilfields to the Turkish port of Ceyhan was ablaze on Sunday, and officials said they suspected another attack by saboteurs.

The pipeline reopened last Wednesday for the first time since the war that toppled Saddam Hussein, but was shut down just two days later after a blaze officials blamed on a bomb attack.

Just as the initial fire was being brought under control on Saturday, a second blaze broke out a few kilometres away.

A US Army spokesman said in Baghdad that the damage from the first attack could also take up to two weeks to repair.

"The different reports we have seen have been anywhere from 10 days to two weeks, but they still have a lot to find out about what needs to be done," the spokesman said.

A series of setbacks, including looting, sabotage and power failures, have thwarted the recovery of Iraqi oil exports, helping drive US crude futures higher and back towards their post-attack high of nearly US$33 per barrel set earlier this month.

Oil traders also feared supplies could be under threat from Nigeria, where rival ethnic militias waged gun battles on Sunday in the southern oil city of Warri for the third consecutive day, witnesses said.

The violence is the most serious since March, when an ethnic Ijaw rebellion forced oil majors to evacuate key installations and shut down 40 per cent of OPEC (Organization of Petroleum Exporting Countries) member Nigeria's oil output.

Concerns over world supplies have kept the OPEC reference price above its target range for 10 straight days.

The price is used by the cartel to determine when to raise or lower its production, with an informal agreement to raise output if the price holds above the target range for 20 days.

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