Oil trenches used during the war have been set alight

Predictions that oil will soon be flowing out of Iraq again, following the lifting of UN sanctions, are beginning to look overly optimistic, according to market watchers.

The director general of South Oil Company, the company responsible for the oil industry in southern Iraq, has warned that rampant looting throughout the country has spread to the oilfields.

Jabar al-Leaby told Reuters that production in the Rumaila oilfields was still way off pre-war levels and was unlikely to pick up until order is restored.

Analysts and economists agree. Manouchehr Takin from the Centre for Global Energy Studies told BBC News Online there had been a lot of damage to surface production facilities, making production impossible.

"It's very sad," said Mr Takin. "This is a very serious problem... and the Iraqi people do need oil."

Iraqi's plentiful oil reserves are the country's main hope of returning to economic prosperity.

Naive optimism?

Mr Takin said the looting was dealing a double blow to the oil industry.

We have progressively seen predictions of substantial quantities (of oil) but those have yet to manifest themselves David Thomas, Commerzbank

Much of the oil infrastructure, including wells and pipelines, is located in the desert and unattended, he said, thus making it easy for looters to steal pumps, hoses or "any piece of hardware that they can use or sell".

At the same time, the isolated position of the wells is making engineers reluctant to leave their homes to repair them.

"They're worried to leave their houses empty to travel miles each day... and then there is the threat that the vehicles they are travelling in will be robbed."

Mr Takin had previously predicted oil production would return to pre-war levels within six months, but said that was now looking "a little optimistic".

No more Rumaila?

The United Nations Security Council lifted sanctions on Iraq on 22 May, prompting suggestions that Iraqi oil would soon return to the market.

The civil administration minister for Iraq is visiting refineries

The head of the reconstituted oil ministry, Thamir Ghadban, predicted then that oil production would be back up to the pre-war level of 2.5m barrels per day (bpd) within a few months.

But Mr al-Jeaby said on Wednesday the Rumaila oilfields were currently producing just 150,000 bpd.

"There will be no more Rumaila at all if this continues," he said.

"This is a huge problem. People are suffering a lot and no-one is taking this issue seriously."

No cuts

Analysts say they are receiving conflicting reports of the situation in Iraq, making projections difficult.

"We're all a bit in the dark," David Thomas at Commerzbank told BBC News Online.

"We have progressively seen predictions of substantial quantities (of oil) but those have yet to manifest themselves... so one becomes more and more sceptical."