Assassination sees oil price rise

13 April 2012

WORLD crude prices were rising today after the assassination of one of Iraq's most senior oil officials. Iraqi police revealed gunmen killed Ghazi Talabani as he travelled to work in Kirkuk. Brent crude rose 13 cents to $35.16 a barrel while US light crude climbed 26 cents to $37.45.

Separately, Russia said it could not boost oil exports in response to a call from Opec, which releases its May Oil Market Report tomorrow. It will seek help from producers outside the cartel to raise global oil supplies and cool high prices, which have held stubbornly above $35 a barrel, president Purnomo Yugiantoro said in Jakarta today.

Purnomo said he would be sending letters to Russia, Angola, Mexico and Oman to request that they pump more crude oil.

Overnight in Iraq, rebels struck a new blow to the peace process when they sabotaged an oil pipeline just two weeks before the formal end of the US-led occupation.

Two explosions at a pipeline feeding storage tanks in Basra brought the terminal to a virtual standstill and cut Iraq's oil exports to a third of their previous level.

The latest setback came as President Bush insisted he would not hand over Saddam Hussein until he is certain he will remain behind bars to face trial.

The fate of the deposed leader may be a sticking point with the new Iraqi leadership.

And the disruption to oil exports - causing a drop to less than 500,000 barrels a day - is a body-blow to Bush and Tony Blair's hopes of boosting Iraq's economy.

The sabotage, which will take seven to 10 days to repair, will renew concerns about supplies from the country's Gulf ports, which until May had operated largely undisturbed.

The fear is that, even with massive security, the insurgents will be able to strike almost at will at the pipelines, which run for hundreds of miles, and so cripple the economy of the new government.

Basra and a much smaller terminal nearby are Iraq's only regularly operating outlets.

Its northern pipeline to Turkey has pumped only occasionally this year due to sabotage and has been idle for the past two weeks.

As the June 30 handover date nears, insurgents have led a wave of bombings, assassinations and sabotage to try to prove the new interim government cannot rule effectively in the aftermath of the occupation.

The explosions were the latest in the terror campaign that refuses to let up.

On the political front, President Bush contradicted claims by Iraqi Prime Minister Iyad Allawi that Saddam would be handed over by the end of the month, although he did not rule it out completely.

'We're working with the Iraqi government on a couple of issues, one is the appropriate time for the transfer of Saddam Hussein,' said Bush.

'I want to make sure that when sovereignty is transferred, Saddam Hussein stays in jail,' he added.

The Americans have held Saddam as a prisoner of war at an unknown location in Iraq since his capture in December.

'The ultimate goal is that he should be tried by the Iraqis and the question is how we can make that work,' said a US military source.

'We may see a fudged agreement under which he would come under semi-US control.'

Another factor being discussed is the plight of thousands more detainees who are being held by US-led forces in Iraq.

In London, a Foreign Office source said 'furious negotiations' were under way to find a solution.

Under international law, prisoners of war must be released once the occupation ends.

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