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.
{{/usCountry}}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.
{{/usCountry}}"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."