Explosion Boosts Oil Over $107

Crude oil rose above $107 a barrel in New York after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal.

The Iraqi oil ministry didn't yet know the cause of the blast on the Zubair-1 pipeline, one of two that transport oil to the Basra terminal, an oil ministry official said.

Clashes between Iraqi forces and militants loyal to Shiite Muslim cleric Moqtada al-Sadr are raging for the third-straight day.

"The market will get significantly tighter if the roughly 2 million barrels a day we get from southern Iraq is taken offline," the director of oil practice at Energy Security Analysis Inc. in Wakefield, Mass., Rick Mueller, said.

Crude oil for May delivery rose $1.68, or 1.6%, to settle at $107.58 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the highest since March 18. Futures are up 71% from a year ago.

Brent crude for May settlement rose $1.01, or 1%, to close at $105 a barrel on London's ICE Futures Europe exchange. Futures reached a record $107.97 a barrel on March 17.

The fire was put out before midday local time yesterday and the damage is being assessed, the official said in a telephone interview from Baghdad. He declined to be identified for security reasons.

"Moqtada al-Sadr isn't helping things in the market," the president of Strategic Energy & Economic Research in Winchester, Mass., Michael Lynch, said. "Unrest in Iraq is nothing new, but because of its location Basra matters to the oil market.""

The Basra facility can handle 1.97 million barrels of crude oil a day. Iraq exported 80% of its oil to international markets from its southern Basra terminal in February, according to data from the Iraqi Oil Ministry's Web site.