Oil prices climbed today as tensions brewed in a major oil city of Iraq.
Brent crude futures rose 1.28 per cent to $57.90 a barrel while US benchmark West Texas Intermediate (WTI) prices lifted 1.32 per cent to $52.13 a barrel.
The Iraqi army launched an operation on the oil-rich city of Kirkuk, which is held by Kurdish forces.
Last month, a referendum in the Kurdistan region showed an overwhelming majority favoured independence and stirred tensions.
Iraq is the second biggest oil producer in the Organisation of the Petroleum Exporting Countries (Opec), and traders were worried the Kurdish pipeline would be cut off.
Hussein Sayed, chief market strategist at FXTM, said: "The oil price is the only asset class showing big moves on a quiet Monday."
Brent is up more than one per cent, trading at its highest level since 28 September, after Iraqi forces began marching towards Kirkuk - an oil-rich Kurdish province. Clashes have been reported between Kurdish fighters and Iraqi forces early today, threatening to disrupt output from Kurdish controlled fields.
If the 600,000 barrels a day exports from Kirkuk’s oil fields are halted, I expect Brent to retest September’s high of $59.49.
US sanctions on the table
Fears of renewed US sanctions against Iran also bumped prices higher.
On Friday, President Donald Trump refused to re-certify the 2015 Iran nuclear deal. Congress now has 60 days to decide whether to impose economic sanctions on Tehran that were lifted under the pact.
Around a million barrels per day of crude oil were cut off from global markets under the last round of sanctions.
Sayed added: "If the US Congress goes ahead with rekindling economic sanctions on Tehran, after Trump decertifies the nuclear deal, Brent prices will likely breach the $60 benchmark."