DUBAI, United Arab Emirates (AP) -Saboteurs triggered a cascade of blackouts that halted Iraq’s entire oil export capacity for most of Monday, a move that cost the country almost $60 million in lost exports and rattled already jittery world markets.

Government officials blamed the outage on insurgent attacks that toppled key power pylons in central Iraq and darkened broad swaths of the country, including its two largest cities – Baghdad and Basra.

By late Monday, tankers were being loaded at less than a third of normal capacity with the help of backup generators, Dow Jones Newswires reported.

Analysts said the disruption – a brief one by the standards of postwar Iraq – wasn’t likely to affect world oil prices, especially with demand in North America expected to contract as the summer driving season ends.

But traders were already on tenterhooks over recent oil-related disturbances in Nigeria and Ecuador. With most producers already pumping flat-out, analysts said a dry day in Iraq could still shove prices up.

After climbing as high as $66.25 per barrel, crude futures on the New York Mercantile Exchange settled Monday at $65.45, an increase of 10 cents from Friday’s close.

“The market is very apprehensive, very volatile,” said Muhammad-Ali Zainy, an energy economist at the Center for Global Energy Studies in London. “Any disruption, any cutoff by weather – we are in hurricane season – will lower supply and push up prices.”

Analysts also noticed that an insurgent attack hundreds of miles away from Iraq’s export terminals was ominously able to strangle Iraq’s lifeblood export.

The pumps failed as two oil tankers – one Brazilian, one Spanish – were in the midst of taking on Iraqi crude.

If the rebels show they can do it again, oil markets might send prices sharply higher, said Jamal Qureshi, an oil analyst with PFC Energy in Washington.

“If they’re able to cause nationwide power outages with these attacks, that means more frequent (oil export) outages,” Qureshi said. “If someone figures out they can keep doing this and the Iraqis don’t have a solution to isolate the problem, that could have an effect.”

For Iraq, the outage was expensive. It cost the national treasury some $60 million in lost revenue on daily earnings that average around $85 million, Qureshi said.

If pumping continues below capacity, the cut in exports could cost tens of millions of dollars each day.

Since the start of 2004, Iraq has lost $11 billion in oil revenues, mostly to sabotage, said George Orwel, an oil analyst for Petroleum Intelligence Weekly in New York.

Monday’s disruption was the first since June, interrupting a rare run of good fortune for Iraq’s oil sector. Earlier this year, insurgent attacks and rough weather that prevented ships from docking halted exports for days at a time.

But over the summer, the country managed to raise production and exports, reaching production of 2.1 million barrels per day and exports of 1.6 million barrels per day in July, Orwel said. At times over the past year, overall production dipped as low as 1.6 million barrels per day, he said.

At the same time, Iraq’s badly overtaxed oil fields and export terminals got some long overdue maintenance, Orwel said.

The maintenance, which includes new pumps that inject water back into Iraqi wells to restore pressure, appears to be reversing a drop in the quality of Iraqi crude, which had become heavier, Orwel said.

In the north, the export pipeline from Kirkuk to the Turkish port of Ceyhan even managed to handle brief export shipments before it was closed again by insurgent bombings, Orwel said.

Most of the 300,000 or so barrels per day produced in Kirkuk is instead sent to local refineries for domestic use.

That pipeline has been shuttered by rebel bombs almost continuously since the U.S.-led invasion in 2003.

Few observers think Iraq can be relied on anytime soon for a steady supply.

“People already know every barrel you get out of Iraq is like a windfall, because of the security situation,” Orwel said. “You cannot depend on it.”

AP-ES-08-22-05 1814EDT

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