The offshore oil terminal in Basra is reported to have been shut down after coming under attack by suicide bombers.
It is reported that at least two boats were steered towards the terminal, through which most of Iraqi oil exports flow. The extent of damage to the terminal is not yet known.
Meanwhile, the US Military has said around 30 Iraqi insurgents were killed overnight in a firefight with marines near the flashpoint town of Falluja.
It increases the already grim death toll from rocket and bomb attacks across Iraq today.
It is reported a roadside bomb killed 14 Iraqis travelling by bus to Baghdad. Twelve others were wounded.
Fourteen Iraqis were reported killed and 36 wounded in explosions in a busy market in Baghdad's Sadr City.
At least seven US soldiers were killed in a rocket attack on their base in Taji, 12 miles north of Baghdad.
Further north, in Tikrit, a car bomb near the main US base in the city, is reported to have killed at least four Iraqi policemen.
Meanwhile the US military has said Iraqi insurgents in the embattled town of Fallujah are in regular breach of a ceasefire with US forces, and are effectively holding civilian residents hostage.
Brigadier General Mark Kimmit, said US marines were prepared to go back on the offensive unless the truce is honoured.
