IRAN FORCES OCCUPY IRAQI OIL WELL

Iran Forces Occupy Iraqi Oil Well, Border Guard Says (Update2) Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Maher Chmaytelli and Kadhim Ajrash

Dec. 18 (Bloomberg) -- Iranian forces yesterday entered Iraqi territory at dawn, and occupied well number 4 in the East Maysan field in al-Fakah region, 450 kilometers (280 miles) south of Baghdad, Border Guard General Zaser Nazmi said. The Iranian forces positioned tanks around the well.

The border guard’s comments couldn’t be immediately verified independently.

“They positioned tanks around it and dug trenches,” Nazmi said by phone from Basra. “They are still there, they raised the flag.”

East Maysan in southern Iraq is an old oil field that is no longer in production, according to Nazmi. Iraq is the third largest oil producer in the Middle East after Saudi Arabia and Iran.

Energy analysts and traders were surprised at the news, which comes days before Iran and Iraq meet fellow members of the Organization of Petroleum Exporting Countries at a Dec. 22 meeting in Luanda, Angola.

Crude oil for January delivery rose as much as $1.67, or 2.3 percent, to $74.32 a barrel on the New York Mercantile Exchange, before paring gains to trade at $73.85 a barrel at 1 p.m. London time.

Iran and Iraq waged a bloody eight-year war that ended in 1988, with much of the fighting along the border between southern Iraq and Iran. Iraq has this year signed contracts with several foreign companies to develop its oil fields to revive production.

“From a geopolitical perspective it is a surprising development in terms of timing considering the upcoming OPEC meeting,” said Harry Tchilinguirian, senior oil analyst with BNP Paribas SA in London.

“If verified, the incursion only goes to highlight the still very uncertain conditions on the ground in Iraq that have been impeding the recovery of the country’s oil sector,” Tchilinguirian said.

To contact the reporters on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.netKadhim Ajrash in Baghdad through the Dubai newsroom or mchmaytelli@bloomberg.net

Last Updated: December 18, 2009 08:12 EST

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