In late morning trading on 7 August, the price of West Texas Intermediate oil was $120.49 on the New York Mercantile Exchange, around $27 shy of the all-time record of $147.27 set on 11 July, but an increase on the three-month low of $117.11 set the previous day.

Lawrence Poole, oil analyst at Global Insight, says the pipeline damage may provide enough bullish support to keep prices in excess of $120 in the short term.

“Much will depend on how serious the damage is and a key consideration will be how long the pipeline remains offline,” Poole says. “A time-frame of two weeks has so far been offered, but there is little doubt that a longer shutdown could prompt prices to trend upward over the short term.”

Poole notes that the pipeline passes through a region which is home to Kurdish militants who have made threats to sabotage it in the past, although it is not yet clear whether they are to blame for this incident.