A Reuters reporter at the rural site near Diwaniyah, 180km south of Baghdad, counted 15 charred bodies, including that of a boy, on Tuesday.
A hospital official said eight bodies had been brought to Diwaniyah's mortuary. The cause of the blast was still under investigation, officials said.
One witness said there were still bodies in the fuel pools that had not yet been recovered.
An oil ministry official in Baghdad said the pipe was one of many across Iraq that are out of operation. Residue left in the pipe could have caused the blast, he said.
A fuel crisis is gripping the oil-rich country due to sabotage and crumbling infrastructure, and many Iraqis are desperate for petrol. Oil smuggling has been on the increase.
An elderly man at the scene blamed Baghdad.
"The government is to blame for this. It raised the prices of petrol and forced people to do these dangerous things."
The blast did not appear connected to the violence in Diwaniyah on Monday, when at least 20 Iraqi soldiers were killed in street fighting with Shia militiamen.