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oil prices rise amid iraq tensions

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    Oil prices rise amid Iraq tensions


    2004-Jul-06 06:11 AM

    Oil prices have risen, lifted by a weekend pipeline attack in Iraq and increasing signs that the Organisation of Petroleum Exporting Countries could hold back on a planned production hike next month, analysts say.

    Prices were being supported also by the continuing crisis at Russian energy giant Yukos, they added.

    The price of reference Brent North Sea crude oil for delivery in August climbed 58 cents to 36.50 dollars per barrel in early deals in London.

    New York's benchmark contract, light sweet crude for August delivery, was closed because of a long weekend following US Independence Day on Sunday.

    The contract had closed down 35 cents at 38.38 dollars on Friday as traders locked away profits from a two-day surge in prices.

    "Oil prices remain well supported at high levels assisted by a spate of sabotage attacks in Iraq over the weekend, further comments from OPEC members that current oil prices are fair and more headlines about Russia's largest oil company Yukos that are keeping market participants nervous about future Russian oil production and export levels," Barclays Capital analyst Kevin Norrish said.

    Iranian Oil Minister Bijan Namdar Zanganeh, speaking Saturday, said that current world oil prices were "good" and that OPEC could consider delaying a scheduled production increase when it meets later this month.

    "If at the end of this month we feel there is no need for extra oil, we can postpone the decision on the extra 500,000 barrels per day (bpd)," Zanganeh told reporters.

    Faced with record high prices on world markets, OPEC had announced June 3 it would raise production quotas by two million bpd on July 1, and by another 500,000 bpd on August 1.

    Zanganeh's remarks followed similar comments last Wednesday from Saudi Arabian Oil Minister Ali al-Nuaimi, who said that current prices were "fair" and that there was "no reason to take a measure to reduce or increase production" when OPEC meets on July 21.

    "Prices are higher on OPEC comments and the market will remain sensitive to price fluctuations ahead of the official (output) decision," Informa Global Markets analyst Peter Luxton said.

    Prices were meanwhile receiving a lift also from news that a domestic oil pipeline had been sabotaged near the city of Karbala in central Iraq on Sunday.

    The targeted oil duct served Iraq's domestic market meaning the attack had no impact on the country's all-important oil exports.

    But Iraq's oil industry came under threat on Saturday with the rupture to a main southern oil pipeline, which caused a fresh fall in exports.

    It was not immediately clear if the pipeline had been sabotaged or had sprung a leak. The rupture was at the site of one of two sabotage attacks last month that effectively halted Iraqi exports for almost a week.

    Brought to you by AAP.
    © 2004 AFP
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