The price of oil rose above $107 Monday as violence worsened in Iraq with reports of a massacre by Islamic militants, raising fears of widening instability in the country, a key energy producer.
The northern town of Tal Afar became the latest to fall to the militants, who have already captured a vast swath of territory including Iraq's second-largest city, Mosul. The militants, who on Sunday posted graphic photos of truckloads of Iraqi soldiers that they apparently captured and killed, vow to march on Baghdad.
After rising 4.1% last week, benchmark US crude for July delivery rose 36 cents to $107.27 - the highest in nine months - in electronic trading on the New York Mercantile Exchange.
Brent crude, a benchmark for international oils, gained 63 cents to $113.09 a barrel in London.
The capture of Mosul, a key gateway for Iraqi crude, raises worries about whether the country can rebuild its energy infrastructure and raise production to meet global demand.
A US aircraft carrier has moved into the Persian Gulf as President Barack Obama considers military options, though he has ruled out sending in American troops.
"The US has ruled out putting troops on the ground, raising fears of a protracted period of tensions that might spill over into the wider Middle East," Mizuho Bank analysts said in a report. "With no signs of any decisive US actions to enforce the security situation, oil prices continue to price in fears of supply disruptions."