Oil plunges $4 as Iraq restores output

Matthew Robinson
Reuters
April 1, 2008

NEW YORK, March 31 (Reuters) – Oil prices plunged $4 to below $102 a barrel on Monday as a week of heavy fighting in Iraq’s oil port city of Basra ended and officials predicted a recovery in crude exports from the hub within a day.

U.S. crude settled down $4.04 at $101.58 a barrel after trading as low as $100.25, extending losses from Friday. London Brent crude fell $3.47 to $100.30 a barrel.

“There has been some extraction of the geopolitical risk premium because of the easing of military action in southern Iraq, and the exports are likely to be back on track tomorrow,” said analyst Jim Ritterbusch, president of Ritterbusch & Associates.

The attack on the pipeline marked the first disruption of exports from southern Iraq since 2004.

Iraqi officials said operations on a pipeline feeding Basra’s export terminal would recover by Tuesday, after a bomb attack during an Iraqi military crackdown on Shi’ite militants in the area cut exports by about 100,000 barrels per day.

Shi’ite cleric Moqtada al-Sadr called his Mehdi fighters off the streets Sunday to end a week of bloodshed, easing fears of further damage to oil infrastructure in the region.

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