OPEC warning as oil hits new peak
Iraq oil pipeline damaged in attack
LONDON, England -- Oil prices have soared to new heights following an attack on an Iraqi pipeline and a warning from OPEC that there is little it can do to ease the supply crunch.
U.S. light crude reached $44.24 a barrel Tuesday, the highest level since crude futures were launched on the New York Mercantile Exchange in 1983.
In London, the benchmark Brent crude futures contract hit a session peak of $40.45, the highest since the October 1990 all-time peak of $40.95 a barrel in the run-up to the first Gulf War.
The latest surge in oil prices comes after OPEC President Purnomo Yusgiantoro said the cartel had no extra oil to immediately supply the world market to bring down prices.
"The oil price is very high, it's crazy. There is no additional supply," Purnomo told reporters in Jakarta.
"Minister Naimi has said Saudi Arabia can increase production but they cannot do it immediately," he said, referring to Ali al-Naimi, oil minister for the biggest exporter Saudi Arabia.
Purnomo's comments echoed those on Monday of Algerian Oil Minister Chakib Khelil, who said the Organization of the Petroleum Exporting Countries had done all it could to stop this year's oil price rally.
"OPEC can do nothing," Khelil told reporters in Algiers.
Analysts warn any disruption to supply could send prices surging again.
John Vautrain, Vice President of Singapore-based oil consultancy Purvin & Gertz, told CNN Tuesday that the likely trigger for any further price rise would be a terrorist attack or other disruption to supply.
He said that with oil coming from a variety of suppliers ranging from Venezuela, Nigeria and Russia to the Middle East, there were "plenty of opportunities" for disruption.
Vautrain said that if oil were to break the $50 a barrel mark, "that would be a big psychological barrier."
While nominal oil prices have risen sharply since the early 2002 level of about $20 a barrel, they are still well below the levels reached in the "oil shock" of the early 1980s after adjusting for inflation.
According to the U.S. Department of Energy, the average price of oil in 1981 was $31.77 a barrel, or about $60 in 2004 dollars. The February 1981 peak price of $39.00 equals about $73.65 today.
U.S. Homeland Security Secretary Tom Ridge said Sunday that security was being stepped up in Washington, New York City and northern New Jersey after "alarming" intelligence terrorists could be targeting well-known buildings with car bombs. (Full story)
Traders remain concerned about global oil supplies due to possible sabotage strikes on oil facilities in the Middle East at a time when major producers are operating at near full capacity.
"The threat alert is bringing more confusion and uncertainty into the market," John Brady, an analyst at ABN AMRO in New York, told Reuters Monday.
An official with Iraq's Northern Oil Company -- overseeing Iraq's oil production and distribution in the north -- said Tuesday an attack has again damaged a pipeline that was ready to resume pumping from the oil fields in Kirkuk to the Turkish port of Ceyhan.
No other details on the attack were immediately available.
 |  Prices have been running at 14-year highs on London's petrolium exchange. |
Before the attack, officials were expecting exports to resume within a few days.
This line has been frequently targeted by saboteurs, but only pumps a small portion of Iraq's oil production -- about 250,000 barrels per day. The southern Iraq oil fields deliver a daily average of 1.8 million barrels.
At the weekend, the head of British oil giant BP forecast that oil prices were unlikely to decline any time soon.
"What with the insecurity of supply, the price seems to be holding up quite high," BP chief executive John Browne told the BBC on Sunday. "One day it will come down, but not in the very short term I'm afraid."
Prices began soaring last Wednesday after news that Russian oil giant Yukos might face a ban on oil sales while courts try to enforce a multi-billion-dollar tax debt.
On Thursday, prices eased slightly after Russia's justice ministry allowed Yukos to keep pumping crude and reports Friday that Russian bailiffs have given the company a month to pay off its $3.4 billion tax debt. (Full story)
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Associated Press contributed to this report.
