Aljazeera learnt oil pipelines in the Fatha area linking Biji and Kirkuk refineries to the Turkish Jihan oilfield came under attack on Tuesday.
"Pumping oil to the Turkish Jihan field has now stopped," an official at the Iraqi al-Shamal oil company told Aljazeera.
Fire-fighters struggled to put out the blaze after the attack 250km north of Baghdad.
As plumes of smoke leapt into the sky, US military officials surveyed the blast, estimating it could take up to three days to put out the fire.
"It is a sabotage," said Brigadier Muhammad Ibrahim Salih, the Deputy Police Commander in Biji told Aljazeera.
Crude oil cascaded down the hillside into the river. Fire burned atop the water, fuelled by the gushing oil.
"Biji is the chokepoint," said Lieutenant Colonel Lee Morrison of the US Army Corps of Engineers.
"It's so easy to hit," he added.
The attack at 0300 GMT came soon after engineers had completed a two-month project to install two critical valves that had been damaged in an earlier blast.
Firemen struggle to put out the
blaze 250km north of Baghdad
Morrison, commander of the northern office Task Force Shield based in Kirkuk, said US soldiers had dropped off barriers to guard the lines two days ago, but Iraqi authorities had not yet erected them.
Iraqi oil officials have been struggling to guard the country's vast oil infrastructure, deploying thousands of oil security officers to guard the lines.
Iraq was producing more than 2.5 million barrels of oil per day and exporting two million, Iraqi Oil Minister Thamir Ghadhban said.
The war-torn country was pumping "more than 2.5 million" barrels per day and managing to export 80% of that, the minister told reporters as he arrived in Vienna for an OPEC meeting on Wednesday.
Armed fighters, however, have largely acted with impunity and often inside knowledge.
The attack on the pipeline has
cost Iraq $2 billion in losses
"They already know it's a critical point because they've blown it up before," said Morrison of St Petersburg, Florida. "They obviously know the system. But it's not rocket science."
Fighters waging a 16-month uprising have attacked oil pipelines as part of a campaign to destabilise the interim government of Prime Minister Ayad Allawi and drive US-led forces from the country.
Allawi told reporters on Monday the sabotage of oil pipelines had already cost the country $2 billion in losses.
Iraq holds 11% of the world's crude oil reserves, but its output has been excluded from the OPEC's quota system since 1990 when the United Nations imposed sanctions on the country.
Before that it was producing 3.14 million barrels per day, on a par with Iran.