The price of oil continued to climb Friday, nearing $107 a barrel as Iraq’s widening insurgency fueled concerns that crude supplies from OPEC’s No. 2 producer could be hurt.
After jumping over $2 on Thursday, the benchmark U.S. oil contract for July delivery was up another 44 cents to $106.97 a barrel in electronic trading on the New York Mercantile Exchange. It had earlier hit a high of $107.68.
Brent crude, a benchmark for international oils, was up 54 cents to $112.96 a barrel on the ICE Futures exchange in London.
Oil prices have risen to 10-month highs after an al-Qaida-inspired group vowed to march on Baghdad after capturing two key Iraqi cities this week, including Mosul, which is in an area that is a key gateway for the country’s crude.
The violence in Iraq is mostly centered in the country’s north, away from the major oil-producing regions of the south. The turmoil hasn’t yet had a big effect on oil exports, though it raises concerns about whether Iraq can continue rebuilding its oil infrastructure and boost output to meet global demand.
“Without the oil production from the south of Iraq, the market would be stripped of an estimated 2.5 million barrels per day,” said a report from analysts at Commerzbank in Frankfurt. “The sharp price rise in the last two days shows that this oil supply is no longer viewed as secure, either.”
Iraq’s oil production has risen by about a fifth since 2011 to 3.3 million barrels per day, making it the second biggest producer in OPEC behind Saudi Arabia.