Oil and Gas

Brent sets new 9-month high on Iraq; US oil ends higher

Oil tanker at the Port of Long Beach, Calif.
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Brent crude hit a nine-month high near $115 a barrel Thursday, with U.S. crude ending moderately higher, amid concerns that ongoing violence in Iraq could limit oil supply from OPEC's second-biggest producer.

Government forces battled Sunni militants for control of Iraq's biggest refinery as Prime Minister Nuri al-Maliki waited for a U.S. response to an appeal for air strikes to beat back the threat to Baghdad.

The Baiji refinery, 200 km (130 miles) north of the Iraqi capital near Tikrit, remained under siege as troops loyal to the Shi'ite-led government held off insurgents from the Islamic State of Iraq and the Levant and its allies who had stormed the perimeter, threatening national energy supplies. If the 300,000 barrels per day refinery stays closed, Baghdad will need to import more oil products to meet its own domestic consumption, further tightening oil markets.

Brent crude was up about $1 above $115 a barrel, after ending 81 cents higher at $114.26 a barrel, its highest settlement since Sept. 6 last year. U.S. crude for July delivery rose 46 cents to settle at $106.43 a barrel. The contract, which expires Friday, settled 39 cents lower in the previous session.

Risks to oil price

Both benchmarks rose more than 4 percent last week in the wake of the insurgency in Iraq, but the rally lost momentum this week as Iraq's Shi'ite government tightened security around its oil infrastructure. Although fighting continued north of Baghdad, the conflict has not yet spread to the southern regions, where most of Iraq's 3.3 million bpd of oil production is processed.

Uncertainty over potential export disruptions out of Iraq has, however, led to little volatility in the oil market this week.

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