Iran said it was pumping oil at full capacity after news of a blast on a pipeline in its south-west on Friday caused a jump in global oil prices. Pipeline blasts happen occasionally in Iran, the world's fifth-largest oil exporter, and are often attributed to sabotage.
"The production of oil in the southern area is still continuing at full capacity and the oil output from the wells is being transferred to other pipelines," Hormoz Qalavand, executive director of the National Iranian South Oil Company, said. Brent oil futures pared some of the gains following this statement but were still up $1 at above $108 a barrel at 1200 GMT as traders cited fears of terrorism in a major Opec producer.
Earlier on Friday, oil had fallen as much as $3 per barrel due to concerns about weakening global economic growth and oil demand. "So far it is not clear if the incident happened due to technical problems or a terrorist act," the semi-official Mehr agency quoted Qalavand as saying. Khuzestan province in Iran's south-west is home to an Arab minority in the largely non-Arab country and it has occasionally been the scene of violent action by militants.
Ten people were sentenced to death in July 2006 in Ahvaz, the capital of Khuzestan, for a series of bombings, but there have been fewer reports of violence in recent years. Last Friday, an explosion in north-western Iran halted gas exports to Turkey and authorities blamed it on Kurdish rebels.
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