UPDATE 9-Oil heads for third weekly decline, but Iran sanctions limit losses

* Global trade shows signs of slowdown, growth outlook dims

* Iraq to halt Kirkuk exports to Iran, may resume to Turkey

* Saudi Arabia says oil market could see oversupply

* U.S. drillers add oil rigs for 3rd week -Baker Hughes (New throughout, updates prices, market activity and comments)

NEW YORK, Oct 26 (Reuters) - Oil prices rose on Friday, supported by expectations that sanctions on Iran would tighten global supplies, but prices were headed for a weekly drop as a slump in stock markets and concerns about trade wars clouded the fuel demand outlook.

Brent crude futures rose 42 cents to $77.31 a barrel by 1:16 p.m. EDT (1716 GMT). The global benchmark is on course for a weekly loss of about 3.1 percent and is down about $10 in three weeks.

U.S. West Texas Intermediate (WTI) crude futures gained 18 cents to $67.51 a barrel. It was on track for a weekly loss of about 2.3 percent.

Prices got some support when two sources said on Friday Iraq will stop trucking crude oil from its northern Kirkuk oil field to Iran in November to comply with U.S. sanctions.

"The market has to wake up to the fact that Iranian sanctions are happening Nov. 4. That's just a couple weeks away," said Phil Flynn, an oil market analyst at Price Futures Group in Chicago.

Washington has said it wants to reduce Iranian oil sales to zero, although this looks unlikely. Still, many buyers, including Iran's biggest customer, China, appear to be falling in line, forcing Tehran to store unsold oil on tankers.

A global collapse in equities has roiled oil markets. "The energy complex is maintaining a relatively strong correlation with daily swings in the U.S. stock market since the huge up-and-down equity fluctuations have become too large to ignore," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Financial markets have been roiled by the U.S.-China trade war, a rout in emerging market currencies, rising interest rates and economic concerns in Italy. There are also signs of a slowdown in global trade, with container and bulk freight rates dropping.

Saudi Arabia's OPEC governor said on Thursday oil markets could face oversupply. "The market in the fourth quarter could be shifting towards an oversupply situation as evidenced by rising inventories over the past few weeks," Adeeb Al-Aama told Reuters.

Saudi Energy Minister Khalid al-Falih said there could be a need for intervention to reduce oil stockpiles.

U.S. crude production is soaring, boosted by technological advances. Output this year is forecast to break the annual record in 1970.

U.S. energy firms added oil rigs for a third straight week, keeping the rig count at its highest in over three years, General Electric Co's Baker Hughes energy services firm said on Friday. Declining productivity in some shale fields has forced companies to drill more to keep output growing. <RIG-OL-USA-BHI>

(Reporting by Stephanie Kelly in New York, Christopher Johnson in London, Henning Gloystein in Singapore and Aaron Sheldrick in Tokyo; editing by Marguerita Choy and David Gregorio)