US oil prices hit a fresh record yesterday, just short of US$45 a barrel, as violence in Iraq disrupted output and exports from that country's southern fields, compounding fears that tight global supplies may be inadequate to meet demand.
US light crude rose to US$44.99 a barrel, the highest since futures were launched on the New York Mercantile Exchange in 1983.
London's September Brent crude dropped to $41.41 a barrel, compared with Monday's record high at $41.70 and a settlement at $41.56.
It is the eighth trading day in a row that oil has scaled new peaks, and some dealers said prices were reaching levels that were likely to attract profit-taking.
"The market is kind of exhausted at this point. I'm looking for a retracement in prices, but it depends how long the Iraqi stoppage runs. If there is a swift resolution, we could easily see a $1 correction," said Tony Nunan, manager at Mitsubishi Corp's international petroleum business.
Iraqi crude exports were running at a reduced 1.1 million BPD yesterday after saboteurs blew up a section of a 48-inch pipeline running from the southern oilfields to two offshore Gulf terminals.
The offshore terminals south of Basra account for all of Iraq's oil exports, which were at 1.9 million BPD before the attack. Sabotage has kept another pipeline running to Turkey from the north mostly shut since the US-led invasion last year.
A senior oil official said the attack had reduced output at the southern oilfields but had not halted production, as other officials had said on Monday.
The disruption underlined the vulnerability of supplies at a time when global demand is accelerating at the fastest pace in 20 years and producers are pumping almost at full tilt.
"Longer-term I'm still bullish. If we continue to have a tight supply-demand balance and we see US stocks draw down as we go into winter, we may see $50 oil," said Nunan.
Security concerns in the Middle East, especially Iraq and Saudi Arabia, have stoked worries over potential supply hiccups at a time when the OPEC producers' cartel is pumping about 30 million barrels daily, a level not seen since 1979.
Traders are also concerned over supplies from Russia's Yukos, which is battling bankruptcy that could disrupt its oil exports. The company, which pumps 1.7 million BPD, or 2 percent of world supplies, is embroiled in a multibillion-dollar tax-debt case.
There are also fears that next weekend's referendum on the rule of Venezuelan President Hugo Chavez may disrupt supplies from the world's fifth largest exporter.
A two-month strike by opponents of leftist Chavez late in 2002 temporarily halted the OPEC producer's overseas sales and caused prices to spike.
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