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Oil Prices Are Unlikely To Break $40 This Year

Oil Prices Are Unlikely To Break $40 This Year

Despite production cuts from OPEC+…

Iranian Oil Pipeline Explodes

An oil pipeline in the Iranian province of Khuzestan, exploded yesterday, TankerTrackers.com reported citing Iran’s state news agency IRNA and disclosing satellite images of the blast. According to the governor of the province, there were no casualties, IRNA reported. Still, a nearby village has been evacuated.

Later reports from the Associated Press said the fire had also affected a gas pipeline, with five people injured.

The cause of the blast was accidental, according to media reports. The 42-inch pipeline was being repaired and what caused the fire was a bulldozer crashing into the pipeline and an oil spill that caught fire. The valves to linked oil and gas pipelines have been shut off to prevent the fire from spreading, but the oil in the Omidieh pipeline needs to burn in full before repairs can be restarted.

This is the second serious pipeline blast in Khuzestan, Iran’s main oil-producing province, in the last two months. In March, a gas pipeline there exploded, killing four and wounding at least five people. The blast was caused by a gas leakage, according to local government officials. However, a deeper cause of such accidents, some believe, is the combination of inadequate safety measures and aging pipeline infrastructure.

Related: Middle East Oil Giants Are About To Upend Oil Trading

While these factors cause accidental pipeline blasts, sabotage is not unheard of, either, in Khuzestan, which is home to most of Iran’s Arab minority. Separatism is a long-running theme in the area and protests are not infrequent either.

The most recent ones, however, had nothing to do with Arabs versus Persians. They were sparked by massive floods that devastated Khuzestan, with the locals blaming the government for its poor handling of the situation. Some even accused the government of deliberately diverting floodwater away from oil facilities instead of cities. Oil Minister Bijan Zanganeh denied the accusations.

The floods also caused Iran to reduce production at the fields in the affected parts of Khuzestan, although the reduction was not particularly significant, at 20,000 bpd. The floods killed more than 70 people and costs Iran US$2.5 billion in damaged infrastructure, homes, and farmland.

By Irina Slav for Oilprice.com

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