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Last Updated: Thursday, 2 September, 2004, 22:35 GMT 23:35 UK
Oil price rally takes off again
Sabotaged Iraqi oil pipeline
Iraq's oil industry is under threat from saboteurs
Oil prices have resumed their upward path, lifted by reports of pipeline sabotage in Iraq and fears that Russian firm Yukos may suspend production.

Brent crude oil rose 53 cents to $42.00 a barrel by the close in London, while crude futures were up 69 cents at $44.06 in New York.

The rally follows a week of steady price declines after US crude futures hit an earlier peak just short of $50.

Analysts said it reflected persistent worries over tight global supplies.

World production is barely keeping pace with soaring demand, making prices highly sensitive to any development which could reduce output.

Running low

The supply situation is expected to become tighter still in the months ahead as the northern hemisphere enters the winter season.

On Wednesday, official figures showed that US oil stocks had fallen to their lowest level since March.

"Despite the recent slide in prices, little has changed in the fundamentals of the oil market," said Paul Horsnell, oil analyst at Barclays Capital.

The latest spike in prices came after the Agence France Presse news agency reported that an oil pipeline running from Kirkuk in Iraq to the Turkish port of Ceyhan had been attacked by saboteurs.

Earlier prices had risen as high as $45.37 on supply worries after the pipeline bombing in Iraq but a wave of profit-taking saw gains largely erased.

The full extent of the damage was not immediately clear.

Prices had already firmed earlier on Thursday when oil giant Yukos warned that it may be forced to suspend output as a result of an ongoing tax dispute with the Russian government.

Yukos accounts for about 2% of global oil production.


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