* Brent crude set for biggest weekly rise since July 2013
* Jihadists push to Baghdad; Obama rules out ground troops
* IEA plays down risk of sudden Iraq export hit
(Updates prices to settlement, adds detail on spread)
By Lorenzo Ligato
NEW YORK, June 13 Crude oil prices rose to new
nine-month highs on Friday as concerns persisted that an
insurgency in Iraq could disrupt oil exports from the
second-largest OPEC producer.
Grand Ayatollah Ali al-Sistani, the highest religious
authority for Shi'ites, on Friday urged his followers to take up
arms against Sunni militants advancing south toward Baghdad,
raising the prospect of further violence.
The surge in both Brent and U.S. crude prices, up about $4
this week, lost some momentum on Friday as the market waited to
see if the conflict in Iraq would threaten oil refineries south
"Right now the market is looking for a comfort zone," said
James Williams, an energy economist at WTRG Economics in London,
Arkansas. "Should the militants reach Iraq's oil patch, then we
have a potential for much higher prices."
Brent futures gained 39 cents to settle at $113.41
per barrel, the highest since Sept. 9. U.S. crude oil
gained 38 cents to settle at $106.91 per barrel, the highest
level since Sept. 18. The spread CL-LCO1=R between the two
benchmarks closed at $6.50.
Brent was set to gain more than 5 percent this week, the
biggest weekly rise since last July, while U.S. crude was on
track for its biggest weekly jump since December.
"You want to have a premium as Iraq is more unstable than
last week, but with no disruptions, how much can you keep?" said
Olivier Jakob at Petromatrix consultancy in Switzerland.
The bulk of Iraq's current oil exports come from south of
Baghdad, still far from the Islamist rebel fighters. Should the
militants advance south of the capital, analysts expect them to
encounter much greater resistance.
Iraqi exports from the north are considered safe for the
moment, analysts said, as the major Kirkuk oil hub is held by
U.S. President Barack Obama said on Friday that the United
States would not put troops on the ground in Iraq and was
reviewing other options to assist the Iraqi government.
Obama said the insurgency so far had not caused major
disruptions to oil supplies from Iraq, but that if insurgents
took control of refineries, other oil producers in the Middle
East would need to help "pick up the slack."
The International Energy Agency played down fears over the
possible loss of oil exports from Iraq in its monthly Oil Market
Report, which was released on Friday.
"Concerning as the latest events in Iraq may be, they might
not for now, if the conflict does not spread further, put
additional Iraqi oil supplies immediately at risk," the
Paris-based agency said.
The IEA said on Friday that OPEC would need to produce 1
million barrels per day (bpd) more oil on average in the second
half of 2014 to balance the global market, which will see a
steep seasonal spike in demand.
The bullish assessment contrasted with the view of OPEC,
which on Thursday said extra production would be more than
sufficient to meet growing demand.
(Additional reporting by Julia Payne and Christopher Johnson in
London and Manash Goswami in Singapore; Editing by Dale Hudson,
Bernadette Baum and Chizu Nomiyama)