Oil on Friday fell from a nine-month high, slipping below $115 a barrel, as concerns eased that violence in Iraq, OPEC's second-largest producer, might lead to supply disruptions.
Government-led forces were concentrated north of Baghdad on Friday, to strike back at Sunni Islamists whose drive toward the capital has prompted the United States to send military advisors to stiffen government resistance.
The fighting in the north continues to pose a risk to exports as foreign oil companies begin to pull out staff. However, the major oilfields south of Baghdad, which export at least 2.5 million barrels per day (bpd) of oil, remain unaffected.
Brent crude slipped 40 cents to $114.68 a barrel by 11:30 am (1530 GMT), after reaching $115.71 on Thursday, the highest intraday price since September 9, 2013.
US crude rose 60 cents to $107.03. It was rallying ahead of the expiry of the July contract on Friday, analysts said.
Last week, both crude benchmarks rose more than four per cent on worries about disruptions to Iraq's domestic oil supply.
Fighting concentrated around Iraq's largest refinery, a 300,000 barrel per day facility in Baiji north of the capital, which was transformed into a battlefield by fighting between government forces and insurgents from the Islamic State of Iraq and the Levant.
Government forces appeared to be still holding out in the oil refinery, mitigating concerns about export disruptions.
Brent crude fell for the first time since Monday, though it is still up 1.2 per cent from the beginning of the week - its second weekly gain in a row.
"We've been rallying for the entire week here and reached a new nine-month high. Now Brent is taking a pause for breath, as people assess what's the reality in Iraq," said Matt Smith, an analyst at Schneider Electric in Louisville, Kentucky. He added that prices are unlikely to rise further "unless we see significant deterioration of the situation in Iraq and supply disruptions".
The fighting in Iraq has highlighted how outages have put a squeeze on surplus oil production capacity. Iraq's northern exports of about 300,000 bpd have been offline since March, while output has also been affected by unrest in fellow OPEC member nation Libya, sanctions on Iran and oil theft in Nigeria.
The threat to supply in Iraq coincides with outages that are keeping almost 3 million bpd of global supply - more than 3 per cent of daily world demand - offline in Syria, Libya, Iran and Nigeria, among other countries.
Government-led forces were concentrated north of Baghdad on Friday, to strike back at Sunni Islamists whose drive toward the capital has prompted the United States to send military advisors to stiffen government resistance.
The fighting in the north continues to pose a risk to exports as foreign oil companies begin to pull out staff. However, the major oilfields south of Baghdad, which export at least 2.5 million barrels per day (bpd) of oil, remain unaffected.
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"The events unfolding in Iraq will continue to dictate the direction on the market and support the oil price for the time being at a high level," said Barbara Lambrecht, analyst at Commerzbank in Frankfurt.
Brent crude slipped 40 cents to $114.68 a barrel by 11:30 am (1530 GMT), after reaching $115.71 on Thursday, the highest intraday price since September 9, 2013.
US crude rose 60 cents to $107.03. It was rallying ahead of the expiry of the July contract on Friday, analysts said.
Last week, both crude benchmarks rose more than four per cent on worries about disruptions to Iraq's domestic oil supply.
Fighting concentrated around Iraq's largest refinery, a 300,000 barrel per day facility in Baiji north of the capital, which was transformed into a battlefield by fighting between government forces and insurgents from the Islamic State of Iraq and the Levant.
Government forces appeared to be still holding out in the oil refinery, mitigating concerns about export disruptions.
Brent crude fell for the first time since Monday, though it is still up 1.2 per cent from the beginning of the week - its second weekly gain in a row.
"We've been rallying for the entire week here and reached a new nine-month high. Now Brent is taking a pause for breath, as people assess what's the reality in Iraq," said Matt Smith, an analyst at Schneider Electric in Louisville, Kentucky. He added that prices are unlikely to rise further "unless we see significant deterioration of the situation in Iraq and supply disruptions".
The fighting in Iraq has highlighted how outages have put a squeeze on surplus oil production capacity. Iraq's northern exports of about 300,000 bpd have been offline since March, while output has also been affected by unrest in fellow OPEC member nation Libya, sanctions on Iran and oil theft in Nigeria.
The threat to supply in Iraq coincides with outages that are keeping almost 3 million bpd of global supply - more than 3 per cent of daily world demand - offline in Syria, Libya, Iran and Nigeria, among other countries.