Brent nears nine-month high on Iraq

Brent crude oil traded near the highest level since September and West Texas Intermediate (WTI) was little changed as militants in Iraq seized more territory and President Barack Obama warned that the crisis may spill over into other countries.

Brent futures climbed as much as 0.7 per cent in London. Fighters from the Islamic State in Iraq and the Levant took control of Iraq's border crossings with Jordan and Syria, Hameed Ahmed Hashim, a member of the Anbar provincial council, said by phone yesterday. A Chinese manufacturing gauge rose to a seven-month high in June, indicating the economy of the world's second-biggest oil user may be picking up.

"We see further price gains, regardless of the fact that oil supply remains unaffected" in Iraq, Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. "It's fear that drives prices up, not real supply disruptions. The latter remain very unlikely."

Brent for August settlement advanced as much as 85 cents to $115.66 a barrel on the London-based ICE Futures Europe exchange and was at $114.83 at 1:37 p.m. London time. The grade traded at $115.71 on June 19, the highest since September 9. Prices have gained 3.6 per cent this year. The European benchmark crude was at a premium of $8.04 to WTI on ICE, from $7.98 on June 20.

WTI for August delivery rose as much as 62 cents to $107.45 a barrel in electronic trading on the New York Mercantile Exchange.