UPDATE 9-Oil inches up as Iran and United States trade threats

Laila Kearney

* Brent crude tops $70, WTI hits highest since April

* OPEC December oil output slips as Nigeria, Iraq comply more

* Iraq calls on foreign troops to leave

* Trump threatens sanctions on Iraq if U.S. troops forced to leave

* U.S. will also take action if Iran strikes back -Trump (Updates prices, market activity and comments)

NEW YORK, Jan 6 (Reuters) - Oil prices edged up on Monday, after Brent touched above $70 a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after a U.S. air strike killed a top Iranian military commander.

Brent crude futures gained 35 cents to $68.95 a barrel by 2:14 p.m. EST (1914 GMT), after soaring to a high of $70.74 a barrel from Friday's settlement.

U.S. West Texas Intermediate crude was up 24 cents at $63.29 a barrel after hitting $64.72, its highest since April.

Oil pared gains during the session on rising doubts that Iran would strike back in a way that would disrupt oil supplies.

"There seems to be an emerging dialogue along the lines that it's not in the Iranians' interest to lash out and attack oil infrastructure," said Bob Yawger, director of futures at Mizuho in New York. "Because any attack on the oil infrastructure would most likely rally the barrel and that would, in turn, most likely shut down Iranian exports."

Oil jumped more than 3% on Friday after a U.S. air strike in Iraq killed Iranian military commander Qassem Soleimani, heightening concerns about an escalation in conflict in the Middle East and the possible impact on oil supplies.

The region accounts for nearly half of the world's oil production, with a fifth of the world's oil shipments passing through the Strait of Hormuz.

U.S. President Donald Trump on Sunday threatened to impose sanctions on Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), if U.S. troops were forced to withdraw from the country.

Baghdad earlier called on U.S. and other foreign troops to leave Iraq.

Trump also said that the United States would retaliate against Iran if Tehran were to strike back after the killing.

"The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks," said Norbert Rucker, head of economics at Swiss bank Julius Baer.

In the United States, crude stocks fell by their most since June as exports exceeded 4 million barrels per day for the first time in history, the Energy Information Administration said on Friday, which also supported crude prices.

OPEC oil output fell in December as Nigeria and Iraq adhered more closely to pledged reductions and top exporter Saudi Arabia made further cuts ahead of a new production-limiting accord, a Reuters survey found.

(Reporting by Laila Kearney; Additional reporting by Noah Browning in London; Editing by David Goodman and Lisa Shumaker)