March 27 (Bloomberg) -- Crude oil rose above $107 a barrel in New York after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal.

The Iraqi oil ministry didn't yet know the cause of the blast on the Zubair-1 pipeline, one of two that transport oil to the Basra terminal, an oil ministry official said. Clashes between Iraqi forces and militants loyal to Shiite Muslim cleric Moqtada al-Sadr are raging for the third-straight day.

``The market will get significantly tighter if the roughly 2 million barrels a day we get from southern Iraq is taken offline,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts.

Crude oil for May delivery rose $1.68, or 1.6 percent, to settle at $107.58 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the highest since March 18. Futures are up 71 percent from a year ago.

Brent crude for May settlement rose $1.01, or 1 percent, to close at $105 a barrel on London's ICE Futures Europe exchange. Futures reached a record $107.97 a barrel on March 17.

The fire was put out before midday local time today and the damage is being assessed, the official said in a telephone interview from Baghdad. He declined to be identified for security reasons.

``Moqtada al-Sadr isn't helping things in the market,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Unrest in Iraq is nothing new, but because of its location Basra matters to the oil market.''

The Basra facility can handle 1.97 million barrels of crude oil a day. Iraq exported 80 percent of its oil to international markets from its southern Basra terminal in February, according to data from the Iraqi Oil Ministry's Web site.

Steady Exports

``Iraq exports have been quite steady for the last six months, so the crude markets will feel the loss of these supplies,'' said Mike Wittner, head of oil research at Societe Generale SA in London. ``A lot of crude is at risk.''

Iraq has an estimated 115 billion barrels of proven oil reserves, behind Saudi Arabia and Iran, according to BP Plc figures. Iraq produced 2.32 million barrels of oil a day in February, according to Bloomberg News estimates.

Crude oil climbed to $111.80 a barrel on March 17, the highest since trading began in 1983. Commodity prices have surged as the dollar dropped. Investors purchased energy and minerals as a hedge against inflation.

The U.S. currency has fallen more than 8 percent against the euro and almost 12 percent against the yen this quarter, touching $1.5903 per euro on March 17, the lowest level since the European currency debuted in 1999.

Safe Haven

``Investors are looking for a safe haven and there aren't many at this time,'' Lynch said. ``Until the financial crisis settles down, commodities will look like a good place to put money.''

Prices also rose because an Energy Department report yesterday showed U.S. gasoline stockpiles fell more than forecast last week. Supplies dropped 3.29 million barrels to 229.2 million barrels. Inventories were expected to decline 1.5 million barrels, according to a Bloomberg News survey.

The report also showed that crude-oil inventories rose less than forecast.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: March 27, 2008 15:18 EDT