LONDON, Sept 29: Oil prices rose on Monday as traders took the news that thousands more US troops are to be sent to Iraq as a sign that much work remains before the country’s vital oil infrastructure is properly protected.
The price of reference Brent North Sea crude oil for November delivery rose 31 cents per barrel to $26.95.
New York’s benchmark light sweet crude November contract gained 30 cents to $28.46 in early trading.
The market was somewhat spooked by news over the weekend that the Pentagon had mobilised an extra 10,000 troops for duty in Iraq, with 5,000 more placed on standby.
The US-led authorities in Iraq had been hopeful that the country’s vast oil reserves could be swiftly tapped to a significant degree following the war to unseat Saddam Hussein, with exports helping to pay for reconstruction.
However this promised bonanza has failed to fully materialize, with a series of sabotage attacks on oil pipelines adding to existing problems caused by ancient and often damaged production facilities.
“Prices are a bit stronger due to the US report over the weekend that it would send 10,000 more troops to Iraq,” said GNI trader Lee Elliott.
“That raises concerns that more anti-American sabotage on oil pipelines will occur. That could have an effect on oil facilities,” he said.
“This is not major — sabotage happens on a weekly basis — but people are concerned that it could get worse.”
The main oil pipeline running from northern Iraq to Turkey was attacked four times inside a month, and officials said on Monday that it will not be ready for use again before mid-October.
“Technical teams are working day and night to repair the pipeline which was damaged in a series of terrorist attacks that halted Iraqi exports,” said Manaa al-Obeidi of the North Oil Company.
Traders were also keeping a wary eye on Tropical Storm Kate, which on Monday was churning some distance from land in the Atlantic, near the Azores, but was forecast to turn in the direction of the US East Coast.
“It seems that the hurricane season is picking up, so this could affect some refineries,” said Elliott.—AFP