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Last Updated: Thursday, 12 August, 2004, 14:15 GMT 15:15 UK
Oil at new high on Iraqi violence
Part of the al-Zubayer oil field near the Iraqi southern city of Basra
The ongoing violence in Iraq is continuing to push up oil prices
The price of oil has reached yet new record highs due to continuing concern at the ongoing violence in Iraq.

In New York the price of a barrel of US light crude rose 33 cents to $45.13, while in London, Brent crude climbed 50 cents to $42.07.

The fresh highs come after militiamen loyal to Moqtada Sadr threatening new attacks on Iraqi oil facilities.

The threats have forced Iraqi officials to close one pipeline as a precaution, and oil exports are down by half.

Iraq is only currently able to export oil at a rate of 41,000 barrels an hour, compared with the usual 80,000.

Demand pressures

Everything's gone wrong in the oil market recently
David Thurtell, Commonwealth Bank of Australia

Most of the oil goes through the British patrolled southern city of Basra, where Sadr's followers have threatened to attack oil facilities unless US forces stop their military action in the Iraqi holy city of Najaf to the north.

The Americans are however continuing with their efforts to stop the insurgency in Najaf, surrounding the centre of the city in fierce fighting.

The reduced oil output from Iraq could not have come at a worse time for a global oil market where supply is struggling to keep up with strong demand.

Saudi Arabia said on Wednesday that it was ready to pump as many as 1.3 million extra barrels a day of oil to try to cool runaway prices, but this had little effect on oil costs.

"Everything's gone wrong in the oil market recently," said David Thurtell, commodities strategist at Commonwealth Bank of Australia.

"If you wanted to paint the worst scenario picture, you couldn't do much better."

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