Oil futures held near nine-month highs Monday on concerns that escalating violence in Iraq could spread to the country's oil-producing southern region.
ICE August Brent settled 48 cents higher at $112.94/barrel. The front-month contract reached $113.28/b during the session, near Friday's nine-month high of $114.68/b -- the highest level for a front-month contract since September 2013.
NYMEX July crude settled 1 cent lower at $106.90b; still the contract remains in the upper end of a recent range between $106.37/b and $107.68/b -- a nine-month high for front-month crude reached on Friday.
In products, NYMEX July ULSD settled 1.03 cents higher at $2.9979/gal and July RBOB ended 1.41 cents higher at $3.0718/gal.
Crude futures were higher as reports of escalating violence in Iraq continued to ratchet up fears of a supply disruption from the second largest OPEC producer, said Gene McGillian, analyst at Tradition Energy.
OPEC Secretary General Abdalla el-Badri said Monday the oil market had been spooked by the ongoing violence in Iraq, and said that if the situation were to change in the coming months, OPEC would look again at what action it could take.
Phil Flynn, senior analyst at Price Futures Group, noted that Iraq's army was trying to fight back the Islamic State of Iraq and Syria (ISIS) that has taken over northern cities like Mosul and Tikrit and its 300,000 b/d refinery.
And while the oil still flows out of Iraq, Flynn noted that the natural gas to Ukraine and Europe does not, which also aided the upside in futures.
"But the market appears to have mostly priced in this risk and the fact that Europe is well supplied with natural gas and that it is summer is easing the upward momentum," Flynn said.
The head of Russia's Gazprom said Monday that the transit of Russian gas via Ukraine to Europe is continuing as normal despite Moscow halting supplies to its western neighbor (See story, 1118 GMT).
