July crude settled 77 cents lower at $28.58 per barrel on the New York Mercantile Exchange after Philip Carroll, Washington's point man in the battered Iraqi oil sector, told the Wall Street Journal that output was poised to increase in the near future, and exports of 500,000 barrels per day could be under way by the middle of June.
"We will undoubtedly, very soon, be ramping up production," Carroll told the Journal from Baghdad.
June gasoline on NYMEX fell 1.72 cents on the day after the rainy Memorial Day driving holiday to 87.80 cents per gallon.
The resumption of Iraqi exports has been a long-awaited event. But traders were unwilling to get too caught up in the bearish enthusiasm of Carroll's statements due to a lack of hard evidence that the last of the post-war red tape has been cleared away and export sales are imminent.
Also, OPEC is scheduled to meet June 11 to discuss production quotas and could order cuts that would offset any new shipments from Iraq in order to maintain current price levels.
The first oil would come from the southern Iraqi oilfields that were captured largely intact in the opening days of the war. There were some instances of sabotage by retreating Iraqi troops, although the decade of economic sanctions since the first Gulf War appeared to have caused more damage through simple wear-and-tear.
Carroll said that priority repairs had been made to manifolds and pipelines connecting the oilfields to the offshore Mina al-Bakr tanker terminal, the only tanker loading facility on the Persian Gulf.
Carroll told the Journal he expected the initial output from both northern and southern Iraq to reach 1 million bpd by the end of June and rise to near its pre-war production of about 2 million bpd in the second half of the year.
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