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Egypt on Monday bombed Islamic State targets in
Libya, where violence has reined in most oil output, and Iraq's
semi-autonomous Kurdistan Regional Government threatened to
withhold oil exports if Baghdad failed to send its share of the
budget.
"The oil price is finding additional support from renewed
greater perception of the risks to supply," said Carsten
Fritsch, analyst at Commerzbank. "In the short term, the
momentum suggests that prices will climb further."
Brent crude <LCOc1> rose 60 cents to $62.00 a barrel by 1101 GMT
(06:01 a.m. EST). It reached a 2015 high of $62.57 on Monday.
U.S. crude <CLc1> was 43 cents higher at $53.21 a barrel.
Oil prices collapsed in the second half of 2014 on oversupply.
The Organization of the Petroleum Exporting Countries refused to
cut its output, choosing to defend market share against U.S.
shale oil and other competing sources.
Brent has jumped by almost 40 percent in the last four weeks,
supported by a sharp fall in U.S. oil drilling. It had reached
$45.19 on Jan. 13, the lowest in almost six years, down from
$115 in June.
The threat to Iraq's northern exports from the revenue dispute
arises as bad weather has cut Iraq's southern shipments this
month.
With risks to Middle East supply back on the market's radar,
International Energy Agency Chief Economist Fatih Birol warned
the rise of Islamic State in Iraq and Syria presented a major
challenge for the investment necessary to prevent an oil
shortage in the next decade.
"The appetite for investments in the Middle East is close to
zero, mainly as a result of the unpredictability of the region,"
he said.
Even so, some analysts see the rally as overblown as the market
remains oversupplied. Crude inventories in top consumer the
United States have hit record highs for the last five weeks.
"U.S. refinery outages, through seasonal maintenance and
industrial action, will weaken U.S. crude demand, exacerbating
the crude stock excess in the near term," BNP Paribas analysts
Gareth Lewis-Davies and Harry Tchilinguirian said in a report.
(Additional reporting by Henning Gloystein in Singapore; Editing
by Dale Hudson)
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