Oil rose more than $2 a barrel after a bomb attack on a major Iraqi crude export pipeline near fighting in the southern port city of Basra slashed exports from the country by about a fifth.US crude gained $2.20 to $108.10 a barrel by 1810 GMT, boosting this week’s gains to more than six per cent.

London Brent crude was $1.26 higher at $105.25.“Today’s action was driven up by the explosion and catching fire of a pipeline in Iraq,” said Nauman Barakat, oil trader and senior vice president at Macquarie Futures USA.The surge in prices followed a jump of almost $5 on Wednesday prompted by a drop in fuel inventories in top consumer the US and a weak dollar that has prompted investors to move money back into commodities.

A shipping source at Iraq’s Basra export terminal said the pipeline attack cut flows on the line to around 1.2 million barrels per day, down 300,000 bpd from average levels, in the first disruption to shipments from Iraq’s south since 2004.Iraq exported 1.54 million bpd of oil in February – the second month in a row that shipments from the war-torn country had stabilized around pre-invasion levels.

“This morning saboteurs blew up the pipeline transporting crude from Zubair 1 by placing bombs beneath it. The pipeline was severely damaged,” a Southern Oil Company official told Reuters.Iraqi officials said efforts were under way to get shipments back to normal, but opinions varied widely on how long the disruption to the pipeline would last.