Production resumed at Iraq's vast southern oil fields after authorities reached an accord with militant Shiites who had threatened to attack the country's vital export pipelines for crude, an Iraqi oil official said late Tuesday. Oil markets welcomed the news, with U.S. crude futures falling by 44 cents a barrel in late New York trading. Iraq's South Oil Co. reversed a decision it made the previous day to curtail output as a precaution against possible sabotage by supporters of radical Shiite cleric Muqtada al-Sadr. The cleric's followers had warned they might attack pipelines in southern Iraq unless the government halted crude exports. Iraq exported 1.75 million barrels a day before South Oil curtailed production. Iraq has the world's second-largest proven crude reserves, most of them in the southern region, and oil is the country's only major source of export earnings needed to rebuild its devastated economy. The Iraqi official credited South Oil's general director Jabbar El-Leaby with having reached an agreement with al-Sadr's supporters. South Oil had reduced crude output and pipeline shipments to storage tanks on the southern Faw peninsula, but it was still able to use oil in storage to load tankers waiting at offshore terminals in the Gulf. One tanker was loading crude late Tuesday at the rate of 15,000 barrels per hour, the official said. «Loading is more or less normal,» the official said.
