* West mulls more sanctions on Russia's vital industries
* Iraq starts production at giant West Qurna-2 field
* Libya Mellitah condensate exports still blocked
By Florence Tan
SINGAPORE, March 31 Brent crude traded near a
two-week high at above $107 a barrel on Monday as simmering
tensions between Russia and the West offset a rise in oil supply
from OPEC's second largest producer Iraq.
U.S. Secretary of State John Kerry and his Russian
counterpart, Sergei Lavrov, discussed ways to defuse the Ukraine
crisis during talks in Paris on Sunday, in which Kerry made
clear Washington still considered Russian actions in Crimea
"illegal and illegitimate."
Brent crude for May was at $107.84 a barrel by 0214
GMT, down 23 cents from Friday's settlement, the highest since
March 14. U.S. crude for May delivery edged down 25 cents
to $101.42 a barrel after settling at the highest since March 7.
"Rising oil supply doesn't seem to be having a negative
impact as people are prepared to buy on dips, mainly because of
the Crimea crisis," Ben Le Brun, a markets analyst at
OptionsXpress in Sydney said. "There is still an element of a
The West was considering more sanctions on Russia's vital
industries including its oil and gas sector after the annexation
of Crimea, while military manoeuvres kept investors on edge.
Rising crude production from the United States and Iraq has
capped price gains.
Front-month Brent is set to post its first quarterly
decline in three quarters, down about 2.5 percent as rising
supply from Iraq and increased exports from Iran have kept the
market well supplied, offsetting disruptions in Africa.
Iraq has started production at the giant West Qurna-2 field,
moving closer to its output target of 4 million barrels per day
(bpd) this year.
Oil condensate flows from Libya's Wafa field to the western
Mellitah port are still blocked, state-run National Oil Corp
(NOC) said. Nigerian crude exports are set to fall to their
lowest since 2009 due to a production outage for the Forcados
Brent traditionally trades at a premium to WTI, and
OptionsXpress' Le Brun said the Crimea crisis should have
widened the premium.
Instead, front-month West Texas Intermediate prices are set
for a 3 percent gain in the first quarter as new pipeline
capacity drained oil from bloated inventories at the contract's
delivery point in Cushing, Oklahoma.
U.S. crude oil exports that hit a 15-year high in January
also helped eased a supply glut caused by booming shale oil
output although exports remained severely limited by
(Reporting by Florence Tan; Editing by Richard Pullin)