CAIRO, 19 June 2004 — Sabotage attacks in Iraq this week paralyzed its oil exports and thwarted OPEC’s decision to hike output, increasing the pressure on high crude prices at the expense of world economic growth. Sabotage has brought exports from Iraq’s southern sea terminals to a standstill, despite assurances from officials that the damage would be repaired in days.
The southern oil fields had produced between 1.6 and 1.8 million barrels per day before attacks on Monday and Tuesday around Basra, 500 kilometers south of Baghdad. World oil prices, which had eased after the Organization of Petroleum Exporting Countries agreed to raise production on June 3 in Beirut, surged in London and New York.
In London, the price of benchmark Brent North Sea crude oil for August delivery rose by 33 cents to 36.54 dollars per barrel in early trading. And New York’s benchmark contract, light sweet crude for delivery in July, advanced 19 cents to 38.65 dollars per barrel in pre-opening electronic deals.
Prices already rose by more than one dollar on both sides of the Atlantic on Thursday in the wake of twin suicide car bombings in Baghdad that killed 41 people and wounded more than 140 other.
The sabotage of the Iraqi pipelines raised fresh concerns about production capacity and the room for maneuver in case of a crisis amid firm global oil demand.
Iraq itself has lost more than $200 million in vital revenues over the past seven months due to 130 attacks on its oil pipelines, Prime Minister Iyad Allawi said. Aside from the damage to desperately needed reconstruction in the war-battered country, the oil market has been deprived of a substantial amount of crude. But with demand rampant, OPEC members have less and less extra supply to make up for any loss of Iraqi output. They are already pumping close to full capacity in order to calm soaring oil prices.
Meanwhile, the six-member Gulf Cooperation Council was preparing to finalize a free trade accord with Syria, set to abolish customs duties for goods produced by the concerned countries, the GCC said Monday. The talks are part of efforts to rid inter-Arab trade, which forms only eight percent of Arab countries’ commerce, of all customs tariffs from 2005 with the planned establishment of a free trade zone for the entire region.
Lebanon is also poised to invite tenders to explore for oil and gas, both onshore and offshore, Energy Minister Ayyoub Mhayyed said Wednesday, as storm clouds gather over Beirut’s colossal $34-billion debt.