World oil prices ease as Iraq resumes exports

World oil prices eased from fresh record highs yesterday after Iraq resumed exports following a sabotage attack on the main export pipeline from its southern oilfields.

US light crude touched $45.04 (€35.87) a barrel, a record in the 21-year history of crude futures trade on the New York Mercantile Exchange, before the news of restored Iraqi supplies sent prices down 44 cents on the day to $44.40 a barrel.

London Brent crude was down 22 cents at $41.34 a barrel.

On Monday, saboteurs loyal to radical cleric Moqtada al-Sadr blew up the main 48-inch pipeline that runs from Iraq's southern oilfields to its offshore Basra and Khor al-Amaya terminals in the Gulf.

Swift repairs saw normal production restored by late yesterday.

With world oil producers pumping close to full capacity, fears are that another outage in Iraq or elsewhere could send prices up to $50 a barrel.

"The prospect of a cessation of Iraqi exports from the country's southern ports for a prolonged period would almost certainly be enough to push oil prices above $50 a barrel since there is not enough spare capacity to cover the 1.7-1.9 million barrels per day of oil exported from Basra," analysts at Barclays Capital said.

Oil prices have climbed more than 30 per cent so far this year for fear that the supply may not cope with the fastest demand growth in more than two decades.

"The world has one of the smallest cushions ever for absorbing a loss of supply while demand growth is the strongest in a generation," said Mr Daniel Yergin, chairman of US consultancy Cambridge Energy Research Associates.