By Alistair Lyon

Baghdad - An oil fire raged on Sunday after saboteurs blew up a vital pipeline, threatening supplies to Baghdad's main refinery and fresh torment for drivers in the capital, Iraqi Oil Ministry officials said.

It was the second major fire to damage Iraqi oil pipelines this month. US officials blamed the first on a gas leak on the main export pipeline from the Kirkuk oilfields to Turkey.

"This incident is an act of sabotage. The pipeline was blown up deliberately," said one Oil Ministry official of the latest blast. He did not elaborate and asked not to be named.

'The pipeline was blown up deliberately'

A Reuters correspondent at the desert scene said orange fireballs and thick black smoke were billowing from the damaged pipeline near a metal pylon at least 12 hours after a US patrol reported the blast at 11pm (19h00GMT) on Saturday.

He said no US troops or Iraqi officials were on the spot and no attempt was being made to extinguish the blaze near the town of Hit, about 140km northwest of Baghdad.

A US military spokesperson said earlier that efforts were under way to put out the fire. He had no word on its cause.

The pipeline, built in the 1980s, connects Iraq's southern and northern oilfields to ensure smooth-flowing exports.

Another Oil Ministry official said any disruption would affect Baghdad's al-Doura refinery, forcing it to rely on crude from the south, where oil installations are in poor shape.

The refinery serves a city whose five million people have barely had time to forget the misery of petrol queues that snaked through sweltering streets for weeks after US-led forces toppled Saddam Hussein on April 9.

The pipeline exploded only a few hours after two US soldiers from the Third Armoured Cavalry were wounded when their Humvee vehicle detonated a landmine in the same area.

US forces have been plagued by hit-and-run attacks in the Sunni Muslim towns such as Hit north and west of Baghdad, where Saddam's government had its tribal roots.

Eighteen American soldiers have been killed in hostile action since major combat was declared over in Iraq on May 1, and insecurity has hampered efforts to revive the economy.

Postwar looting and sabotage at oil facilities have delayed the resumption of Iraq's oil exports and will keep shipments well below pre-war levels for several months, officials say.

Iraqi oil pipelines and installations are spread over vast swathes of sparsely populated desert that is hard to patrol.

Iraq, which exported around two million barrels per day (bpd) before the US-led war, is due to relaunch oil sales on Sunday from eight million barrels stored in Turkish tanks.

De facto oil minister Thamir Ghadhban said on Saturday it would take 18 months - and well over $1-billion - to restore pre-war production capacity of three million bpd.

A week ago, US forces launched Operation Desert Scorpion in a fresh bid to find weapons and curb attacks on American troops, while wooing Iraqi civilians with aid projects.

They have also intensified the hunt for Saddam since seizing his top aide, Abid Hamid Mahmud al-Tikriti, on Monday. Mahmud is reported to have told his captors that the deposed ruler and his two sons had survived the war.

Paul Bremer, Iraq's US administrator, said on Saturday the issue of Saddam's fate needed to be resolved one way or another, because uncertainty emboldened his supporters.

"It gives them an ability to say Saddam is still alive, he's coming back, and we're coming back, and what that does is it disinclines people who might otherwise want to cooperate with us from cooperating with us," Bremer said on a visit to Jordan.

A US military spokesperson said on Saturday that 90 Desert Scorpion raids had captured 540 people.

The same day, a previously unknown group, calling itself the Iraqi National Front of Fedayeen, vowed to intensify assaults on US troops until they leave Iraq.

US officials blame the attacks on Saddam loyalists, though there is widespread resentment at the US occupation and the way the military conducts raids and detains people.