NEW YORK, Aug 9 (AFP) - World oil prices closed at new all-time highs Monday as Iraq's southern oil fields halted pumping to avoid a threatened attack by Shiite Muslim militia.
New York's light sweet crude for delivery in September surged 89 cents to close at 44.84 dollars a barrel in mid-afternoon trading, after briefly flirting near 45 dollars.
The September contract struck an all-time high of 44.98 dollars in the early afternoon here as prices roared past the previous record, set Friday, of 44.77 dollars.
Brent North Sea crude oil for September delivery surged 93 cents to an unprecedented close of 41.56 dollars.
Prices shot higher as factional fighting raged in Iraq.
The Southern Oil Company ceased production for "security reasons" after Shiite militia threatened to attack infrastructure, spokesman Mohammed al-Mohammedi said.
The south had been the only outlet for Iraqi oil. An attack on the pipeline to Turkey halted northern shipments last week.
"It is the renewed uprising of insurgency in Iraq which really got things going," said Refco market analyst Marshall Steeves.
"There is a lot of concern there for supplies," Steeves said.
"The Southern Oil Company reported that it stopped pumping oil because militia troops were threatening to attack its facilities. It looks like the militia are roaming the streets of Basra, which of course is the southern oil port. Also, the oil ministry compound itself in Baghdad was hit by insurgents. There is a lot of unrest there."
In fresh skirmishes Monday a British soldier was killed during clashes with insurgents in Basra.
Steeves said oil shipments in the Persian Gulf also were slow because of a breach in a 38,000-barrel-a-day pipeline serving Basra.
Finally, a move by Russian bailiffs to refreeze oil titan Yukos' main production unit would likely exacerbate concerns, he said.
"I think that will throw fuel on the fire."
Prices had taken a slight breather earlier Monday on hopes of an increase in official OPEC production quotas and a mooted rescue for Russian energy giant Yukos.
Yukos faces possible bankruptcy because of a massive tax demand from Russian tax authorities, threatening to disrupt oil shipments.
US Energy Secretary Spencer Abraham said a tight world market was driving up oil prices but the administration of President George W. Bush had no plan to tap emergency reserves.
"The biggest thing behind it (rising oil prices) is just that demand continues to rise," he told CNBC television.
World oil production was humming at nearly full capacity but economic growth in the United States and elsewhere had led to a "very substantial increase in demand," Abraham said.
The administration would not release oil from the Strategic Petroleum Reserve (SPR) to cut prices, Abraham said.
"We will use our oil reserves if there is a severe disruption in supplies but those reserves are not to manipulate prices with," he said.
Bush in November 2001 ordered that the reserve, stored in huge underground salt caverns along the coastline of the Gulf of Mexico, be filled to its capacity of 700 million barrels. The petroleum reserve is now at a record 665.7 million barrels.
OPEC President Purnomo Yusgiantoro said the cartel may raise its production quotas to prevent further overheating in the oil market.
Yusgiantoro said the Organisation of Petroleum Exporting Countries was capable of beefing up production because of excess capacity.
"The possibility is always open. We have over-capacity, so it can be increased," he told reporters in Jakarta, adding that the measure would be discussed at the next OPEC meeting in Vienna on September 14.
The price of the OPEC basket of seven crude oils reached a new record high of 39.67 dollars on Friday as world oil prices kept soaring, the organisation said in a statement Monday.