The attack on the pipeline in southern Iraq came on the third day of an Iraqi military operation against fighters loyal to Shi'ite cleric Moqtada al-Sadr in the oil port of Basra.
"This morning saboteurs blew up the pipeline transporting crude from Zubair 1 by placing bombs beneath it. The pipeline was severely damaged," a Southern Oil Company official told Reuters.
Iraq exported 1.54 million barrels per day from Basra in February.
U.S. light crude for May delivery rose as high as $107.70 a barrel and it was up $1.30 at $107.20 a barrel by 4:58 a.m. EDT. London Brent crude rose $1.19 to $105.18.
On Wednesday, U.S. crude prices had registered their biggest one day percentage gains after U.S. government data showed a larger than expected falls in fuel stocks.
Crude oil inventories were unchanged last week, against expectations for an increase of 1.7 million barrels.