Prices in New York climbed to a 21-year high of $45.04 on 10 August, up $4 in a week, after saboteurs blew up the main pipeline from Iraq’s southern oil fields to the offshore terminals, cutting Iraq’s oil exports by almost 50 per cent. The International Energy Agency added to the pressure, revising upwards its global demand figure for 2004 to 27 million b/d and warning that spare capacity is down to below 1 per cent of the level of demand.

Another major worry is the failing oil giant Yukos. On 10 August, Russia’s Federal Energy Agency head Sergei Oganesyan said Yukos’ $3,400 million tax dispute may result in a halt to crude shipments from the country’s largest oil exporter.

The tightness of the market was highlighted by the latest weekly data released by the US’ Energy Information Administration on 11 August. Despite an increase in oil imports to 9.5 million b/d and a drop in refinery capacity rates, US crude inventories fell by 4 million barrels to 294.3 million.