KARBALA, Iraq – Insurgents blasted an oil pipeline, setting off a huge blaze and slashing Iraq's daily oil exports by about 25 percent. U.S. troops traded gunfire Monday with fighters loyal to radical cleric Muqtada al-Sadr (search) in this Shiite city south of Baghdad.
American tanks and helicopters destroyed al-Sadr's headquarters in the Baghdad neighborhood of Sadr City in weekend clashes. U.S. officials said 35 Iraqis were killed before fighting ended just before dawn Monday.
In a statement broadcast by Lebanon's Al Manar television, the "political forces of Sadr City" appealed to U.S. authorities to stop attacks on the district and to "peacefully solve this conflict without violence, terrorism and extreme cruelty."
An aide to al-Sadr vowed Monday to step up the campaign against the U.S.-led occupation.
"The second phase of the fight has not been born yet," the aide, Hossam al-Husseini, said in the southern city of Najaf (search), where al-Sadr has taken refuge. "This is a struggle for independence. It will end when the Americans leave Iraq." Elsewhere, U.S. Marines entered the restive city of Fallujah (search) on Monday for the first time since a bloody, three-week siege ended last month. The Marines, accompanied by Iraqi forces, remained in the city for about an hour and left without incident.
Three more American soldiers have died in Iraq -- two from hostile fire and one in a traffic accident.
One soldier from Task Force Olympia, based in northern Iraq, died Monday after an attack on his patrol, U.S. command said in a statement. It did not say when the attack took place.
A 1st Infantry Division was killed and another wounded Saturday when a roadside bomb exploded in Samarra. A soldier from the 16th Military Police Brigade died Sunday night when his Humvee collided with an American tank, the statement said.
In the south, firefighters were still battling a blaze that erupted Saturday after insurgents bombed a pipeline carrying oil for export to a terminal south of the southern city of Basra.
Jabber Luyaibi, director general of Iraq's Southern Oil Company, said engineers managed to divert oil to a second pipeline.
But an official for the State Oil Marketing Pipeline told Dow Jones Newswires that the alternative pipeline was too small to handle the additional flow and that, as a result, Iraq's petroleum exports fell by 25 percent to 1.2 million barrels a day.
Iraq has the world's second-largest proven petroleum reserves after Saudi Arabia, and its return to world oil markets is the key to reviving the economy after decades of war and misrule by Saddam Hussein's ousted regime.
In London, Paul Horsnell, head of energy research at Barclays Capital, said the damage could be repaired quickly and that the disruption of exports would be temporary. But he said the attack was disturbing because "quite clearly, now the southern infrastructure is a target."
Southern Iraq, homeland of the country's Shiite Muslim community, had been relatively quiet compared with the turbulent central and north-central regions, where Sunni Muslim insurgents have been attacking American forces for months.
However, security in the south has deteriorated since U.S. and coalition forces launched a crackdown last month on al-Sadr, the young Shiite extremist, and his al-Mahdi Army militia. Al-Sadr is sought for his alleged role in the murder last year of a moderate, rival cleric in Najaf in April 2003.
Since the crackdown, al-Sadr's forces have clashed with coalition troops in Najaf, where he sought refuge, as well as Basra (search), Karbala and other southern cities.
However, American soldiers have been measured in their moves against the cleric, fearing that an all-out assault could damage sacred religious shrines and inflame the Shiite majority, whose support Washington needs to establish a stable Iraqi government.
In Karbala, 50 miles south of Baghdad, U.S. tanks and armored vehicles traded gunfire with al-Sadr's militiamen for about two hours Monday near the al-Mokhayam mosque, according to residents.
The skirmish tapered off by the afternoon, but the intermittent crackle of heavy machine gun fire could be heard in the area, and al-Sadr's fighters remained outside the mosque. A doctor at Karbala's main hospital said three fighters were wounded.
Elsewhere, a previously unknown group warned foreigners Monday in Basra, the major city of southern Iraq, that they will be targeted for kidnapping and assassination. The message -- directed at Americans, Britons and Kuwaitis -- was made in a videotape from the Al-Taff Martyrs Brigade broadcast by Al-Jazeera television, an Arabic language satellite station based in Qatar (search).
The statement was read by a masked man flanked by armed men, their faces also covered.
Al-Taff refers to the 7th-century battle near Karbala in which Imam Hussein, grandson of the Prophet Muhammad, and his followers were massacred by the Umayyads, their rivals for leadership of the Muslim community. Shiite Muslims, who form the majority of Iraq's 25 million people, revere Imam Hussein.
In Najaf, 50 miles south of Karbala, fliers appeared in the streets Monday with a message in Arabic: "To the followers of Muqtada al-Sadr: If you keep fighting, it will lead to your death. Your fate is in your hands."
It was unclear whether the fliers were printed by American forces or rival Shiite militias who want al-Sadr to leave the city. About 200 supporters of a rival Shiite group -- the Supreme Council of the Islamic Revolution in Iraq -- marched in the holy city on Monday chanting "only the people of Najaf should protect Najaf."