An oil pipeline in the Basra area was attacked and damaged as part of battles between the Iraqi
army militia of Prime Minister Nouri al-Maliki and the Mahdi Army of cleric-in-training Muqtada al-Sadr.
Oil prices hit $107/bbl today after the attack reduced Iraqi oil output almost 25 percent, from 1.56 million barrels per day to 1.2 million
“We’re going to be getting less oil because of the explosion,” said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm.
For traders, the big factor is that Iraqi oil supplies were cut by a deliberate act of terrorism, Cordier said. That raises the prospect of more attacks, and less oil.
That’s despite unnamed “oil officials” denying such a cutback happened.
No word yet on the severity of damages or how long repairs will take, but Corder says to expect the worst:
“I think crude oil is easily going to be testing $120 (in coming weeks),” Cordier said. Crude futures rose to a trading record of $111.80 early last week before retreating.
Well, that negates much of the IRS stimulus checks.