LONDON, Aug 9: World oil prices soared to fresh record high levels on Monday on heightened worries about supply after major producer Iraq stopped pumping crude in the south.
New York's light, sweet crude for September delivery surged $1.02 to an historic peak of $44.97 in early afternoon deals as Iraq's southern oil fields halted pumping because of a threat by Shiite militiamen.
Brent North Sea crude oil for September rocketed also by $1.02 to a record high of $41.65 during late trading in London. Iraq's Southern Oil Company stopped pumping crude after Shiite militiamen threatened to attack local oil infrastructure, a spokesman for the state-owned firm said on Monday.
"We have stopped pumping oil for security reasons," said Hasaneen Mohammed al-Mohammedi without providing further details. Exports from the southern oilfields around Basra have been running at up to 1.7 million barrels per day but have suffered periodic disruption in recent months, at least some of it the result of deliberate sabotage.
"If that's indefinitely interrupted, that would be very serious, because it is difficult to see where else it could come from at the moment," Barclays Capital analyst Kevin Norrish said.
Traders were keeping a nervous watch also on Venezuela ahead of a referendum there on Sunday which the opposition hopes will unseat controversial President Hugo Chavez. "If Chavez was to return, the oil workers are threatening to strike because they are dissatisfied about the way he has been treating them," Prudential Bache trader Christopher Bellew said.
Prices had taken a slight breather earlier on Monday on hopes of an increase in official Opec production quotas and a mooted rescue for Russian energy giant Yukos. A consortium of Dubai-based investors was said to be backing a $10 billion rescue plan for Yukos, according to Britain's Sunday Times newspaper.
Yukos faces possible bankruptcy because of a massive tax demand from Russian tax authorities, threatening to interrupt oil deliveries. Opec President Purnomo Yusgiantoro meanwhile said the cartel may raise its production quotas to match current output levels in a measure to prevent further overheating in the oil market.
Yusgiantoro said the Opec was capable of beefing up production because of excess capacity, comments that had helped to cool prices earlier on Monday. "The possibility is always open. We have over-capacity, so it can be increased," he told reporters in Jakarta, adding that the measure would be discussed at the next OPEC meeting in Vienna on September 14. -AFP