Oil prices jumped by close to $3 a barrel in the first week of July, as a relatively quiet period in the market was abruptly ended by supply disruptions in Iraq, Nigeria and Russia. Spot Brent was trading at $35.90 a barrel on 7 July, compared with $33.03 a barrel a week earlier.

In Iraq, a brief lull in violence following the transfer of power to a sovereign government proved short-lived. Lethal car bombs struck Baghdad and Baquba, while the country's beleaguered oil infrastructure was yet again targeted on 4 July. A blaze disrupted the flow of oil from the southern fields to the Basra and Khor al-Amaya export terminals, and an explosion damaged the link between the northern and southern fields on the same day.

Nigeria, often promising more than it delivers in terms of actual lost production due to social unrest, saw 235,000 barrels a day (b/d) of output cut. France's Total declared force majeure in the face of a strike by the white-collar Pengassan union protesting at the perceived threat of local lay-offs by the company. The French firm accounts for about 10 per cent of total Nigerian production.

In Russia, the supply threat was not physical but legal. Oil giant Yukos is facing bankruptcy after a court ruled in early July that the company owed $3,400 million in unpaid taxes and also froze Yukos' assets. Creditors warned that the firm was in technical default on a $1,000 million loan. Yukos produces more than 10 per cent of Russia's oil.