Oil surges above $71 as Iraqi fears return

LONDON: Oil rose above $71 on Friday as violence continued unabated in Iraq, dashing some hopes that the death of a top al-Qaeda leader would turn the tide for the country’s struggling oil sector. US crude oil rose 95 cents to $71.3 a barrel, trimming this week’s losses of around 3%.

London Brent crude jumped $1.3 to $70.4 a barrel. Prices fell sharply on Thursday after US aircraft killed al-Qaeda’s leader in Iraq, Abu Musab al-Zarqawi, raising some hope for an improvement in security.

Thursday’s move was totally overdone,” said Craig Pennington, an analyst at investment bank Schroders, adding “We can’t assume the destruction going on in Iraq is done by just one person.”

Analysts warned however against reading too much into the killing of Zarqawi, who masterminded the deaths of hundreds in bombings, saying it would not end threats to an oil sector curtailed by decades of war and sanctions.

Iraq is struggling to pump 2 million barrels per day (bpd), down from about 2.5m bpd before the US-led invasion in ‘03.

Prices also found support after tensions reignited between the West and Iran as Tehran launched a fresh round of uranium enrichment.