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Crude holds near 9-month high as Iraq violence intensifies

Drilling for oil in the Bakken shale formation outside Watford City, N.D.
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Drilling for oil in the Bakken shale formation outside Watford City, N.D.

Crude oil futures were mixed in choppy trading on Monday, as advances by Sunni insurgents in Iraq fueled concerns over a potential disruption to oil exports from the second-largest OPEC producer.

Both Brent and U.S. crude added to last week's gains of more than 4 percent, the most since July and December, respectively, sparked by the eruption of violence in Iraq. The rally lost some steam on Monday as the market waited to see if crude oil exports would be affected and whether the United States would intervene to support the Iraqi government.

U.S. Secretary of State John Kerry said the United States was considering air strikes to help the Iraqi government fend off the insurgency, as well as possible discussions with Iran.

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Brent crude for August delivery was up 50 cents near $113 a barrel, after touching an intraday high of $113.28. The July contract, which expired on Friday, went off the board at $113.41 per barrel, the highest settlement since September 2013.

U.S. crude settled down a cent at $106.90 a barrel, after reaching $107.54 intraday, just below Friday's peak of $107.68. The U.S. July contract expires on June 20.

Analysts and oil market participants await any sign of a threat to Iraq's oil supplies, most of which are hundreds of kilometers south of the fighting. Northern exports have run at a trickle for months, and few had expected a rapid recovery. Should the militants advance south of Baghdad, the capital, analysts expect them to encounter much greater resistance.

--By Reuters. For more information on commodities prices, please click here.