London: Brent crude hit a nine-month high near USD 115 a barrel on Thursday on concerns heavy fighting in Iraq could limit oil supply from OPEC`s second-biggest producer.
Government forces battled Sunni militants for control of Iraq`s biggest refinery as Prime Minister Nuri al-Maliki waited for a U.S. response to an appeal for air strikes to beat back the threat to Baghdad.
The sprawling Baiji refinery, 200 km (130 miles) north of the Iraqi capital near Tikrit, was a battlefield as troops loyal to the Shi`ite-led government held off insurgents from the Islamic State of Iraq and the Levant and its allies who had stormed the perimeter, threatening national energy supplies.
Brent was poised for a third day of gains following a rise of more than 4 percent last week after Islamist militants seized much of northern Iraq.
"There are clear concerns that significant supply disruption is not far off," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Brent was up 10 cents at USD 114.36 a barrel by 0940 GMT, after reaching an intraday peak of USD 114.80, its highest since Sept. 9. On Wednesday, it ended up 81 cents at USD 114.26 a barrel, the highest settlement since Sept. 6.
U.S. crude for July delivery rose 30 cents to USD 106.27 a barrel.
VTB Capital oil and commodities strategist Andrey Kryuchenkov said Brent was near the top of its current range around USD 115: "It will be hard to breach USD 115, but then there is little serious resistance until USD 120."
Oil prices found more support after the Federal Reserve gave a positive assessment of the U.S. economy and committed to retaining accommodative monetary policy.
However, U.S. crude eased back after data from the U.S. Energy Information Administration showed domestic crude inventories declined by 579,000 barrels in the week ended June 13, much less than the drawdown of 5.7 million barrels reported by industry group American Petroleum Institute (API).
A Reuters poll of analysts had forecast a drawdown of 700,000 barrels.
Crude stocks at Cushing, Oklahoma rose by 247,000 barrels - the first increase at the oil storage hub after nine weeks of consecutive drawdowns.
Investors are concerned about Iraq`s ability to increase oil production or even maintain current levels, after the head of state-run South Oil Company Dhiya Jaffar said Exxon Mobil had carried out a "major evacuation" of staff and BP had evacuated 20 percent of its staff.
Iraq has asked the United States for air support in countering the Sunni rebels, after the militants had seized major cities in a lightning advance.
But General Martin Dempsey, chairman of the U.S. military`s Joint Chiefs of Staff, gave no direct reply when asked at a congressional hearing whether Washington would agree to the request for air strikes.
President Barack Obama came under pressure from U.S. lawmakers on Wednesday to persuade the Iraqi prime minister to step down over what they see as failed leadership in the face of the insurgency threatening his country.
