Supplies from the Zubair-1 pipeline which feeds the Basra export terminal were cut to about 1.2 million-barrels-a-day (b/d) from about 1.6 million b/d previously.
News of the explosion pushed the price of West Texas Intermediate crude up almost $2 during intra-day trading on 27 March to $107.70, while Brent crude traded at $105.70 during late afternoon trading in London.
London-based investment bank Barclays Capital says previous shutdowns of the Zubair 1 pumping station had resulted in the complete suspension of exports from the south of Iraq.
The bank warns that the latest bombing may result in further problems in the war-torn country, which holds the world’s third biggest oil reserves.
“[The complete suspension] remains a possible outcome, especially considering that the extreme insecurity of the region will make access to and repair of the pipeline difficult. These latest developments further reinforce our view on the tenuous situation in Iraq and the upside risk to prices remains wide open as a result,” the bank says in a statement.
The US government released data on 26 March showing that crude oil inventories were unchanged compared with the previous week, while gasoline and distillate supplies fell by more than forecast.