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Blast in Iran pipeline, oil jumps

world Updated: Aug 05, 2011 17:16 IST

Reuters
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An explosion hit a oil pipeline in west Iran near the border with Iraq on Friday, causing a jump in oil prices as officials said they were probing whether the blast was caused by a technical fault or terrorism.

Pipeline blasts happen occasionally in Iran, the world's fifth largest oil exporter, and are often attributed to sabotage.

Last Friday an explosion halted gas exports to Turkey and authorities blamed it on Kurdish rebels.

An oil ministry official told Reuters the pipeline in the Khuzestan province exploded in the early hours of Friday, shutting flows of up to 40,000 barrels per day (bpd). He said the pipeline was of a 'very average' size. An earlier report by the semi-official Mehr news agency had said the pipeline had a capacity of just 4,000 bpd but also described it as Iran's biggest.

"It has a 40,000 barrels per day capacity. It is a very average pipeline that has a diameter of 20 inches," the oil ministry official, who declined to be named, told Reuters. He added that an estimated 10,000 barrels of oil had been burned in the fire.

The blast occurred in the desert, far from oil production facilities, the official said.

Hormoz Qalavand, executive director of the National Iranian South Oil Company, told Mehr, "So far it is not clear if the incident happened due to technical problems or a terrorist act."

Brent oil futures rose by around 1 dollar at 0930 GMT as traders cited fears of terrorism in a major OPEC producer. Earlier on Friday, oil had fallen as much as 3 dollar per barrel due to concerns about weakening global economic growth and oil demand.

Qalavand said crude flows to the oil city of Ahvaz, in central Khuzestan province, had been halted.

The blast caused a fire over an area of 300 metres with flames 40 metres high, Mehr reported. "The major part of the fire has been brought under control and the rest of it will be fully extinguished within the next hour," Qalavand said on the website of the National Iranian Oil Co.