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Oil jumps to above $106 on Iraq violence

Published on NewsOK Modified: June 12, 2014 at 8:27 am •  Published: June 12, 2014

The price of oil jumped to above $106 a barrel Thursday as an insurgency in Iraq raised the risk of disruptions to supplies at a time when other major crude-producing countries are already pumping near capacity.

The al-Qaida-inspired group that captured two key cities in Iraq earlier this week vowed Thursday to march on to Baghdad.

One of those two cities, Mosul, lies in an area that is a major gateway for Iraqi oil. While the loss of the city has no immediate effect on oil exports, now at over 3 million barrels a day, it adds to concerns over security and the country's plans to expand oil production.

By mid-afternoon in Europe, the benchmark U.S. oil contract for July delivery was up $1.88 to $106.28 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the Nymex contract added 5 cents.

Brent crude, a benchmark for international oils, was up $2.25 to $112.20 a barrel on the ICE Futures exchange in London.

Before the news of the insurgency in Iraq, oil prices were already pressing higher after OPEC countries agreed this week to keep their output target unchanged at 30 million barrels a day. Traders interpreted the decision as recognition within OPEC that most members would not be able to substantially increase output in the short-term even if the world's demand for crude increases.

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