* Sunni Islamists strengthen grip on northern Iraq
* Crude oil flow from Iraqi Kurdistan continues
* Iraqi government secures oilfields
* Kurds demand 25 pct of oil revenues
(Updates prices to settlement)
By Anna Louie Sussman
NEW YORK, June 16 Brent crude oil futures rose
on Monday as advances by Sunni insurgents in Iraq fueled
concerns over a potential disruption to oil exports from OPEC's
Brent's increase extended last week's gains of more than 4
percent, the most since July, which were sparked by the eruption
of violence in Iraq.
The rally lost some steam on Monday as the Iraqi government
tightened security and deployed extra troops around oil
infrastructure and oilfields to help protect its vital energy
industry from Sunni Muslim insurgents who have gained ground
over the past week, according to a senior Iraqi security
U.S. crude oil futures fell, as traders booked profits after
oil futures hit a session high of $107.54. Surging domestic oil
production in the U.S. makes it less vulnerable than other
countries to a supply squeeze out of Iraq.
"U.S. crude is going to have a muted response, because we're
more independent than we were in the past," said Mark Waggoner,
president of Excel Futures in Bend, Oregon.
Brent crude for August delivery rose by 48 cents to
settle at $112.94 a barrel, after touching an intraday high of
$113.28. The July contract, which expired on Friday, went off
the board at $113.41 per barrel, the highest settlement since
U.S. July crude fell by 1 cent to $106.90 a barrel,
after swinging by nearly $1, between $106.61 and $107.54. The
U.S. July contract expires on June 20.
The spread between the two August benchmarks CL-LCO1=R
widened out to $6.72, after earlier narrowing to $5.99.
U.S. Secretary of State John Kerry said the United States
was considering air strikes to help the Iraqi government fend
off the insurgency, but would not coordinate military action
EXPORTS SAFE FOR NOW
On Sunday, Sunni insurgents seized a mainly ethnic Turkmen
city in northwestern Iraq after heavy fighting, intensifying
their grip on the north.
Analysts and oil market participants await any sign of a
threat to Iraq's oil supplies, most of which are hundreds of
kilometers south of the fighting. Northern exports have run at a
trickle for months, and few had expected a rapid recovery.
The Kurdistan Regional Government believes its share of
total Iraqi oil sales should be as high as 25 percent, up from a
current 17 percent, the KRG's official spokesman said on Monday.
Should the militants advance south of Baghdad, the capital,
analysts expect them to encounter much greater resistance in the
largely Shi'ite south.
Meanwhile, a third export cargo of piped oil from Iraqi
Kurdistan is scheduled to depart Turkey's Mediterranean port of
Ceyhan on June 22, and crude oil from Iraqi Kurdistan is flowing
(Additional reporting by Robert Gibbons in New York, Claire
Milhench in London and Jacob Gronholt-Pedersen in Singapore;
Editing by Jason Neely, Dale Hudson, Marguerita Choy, Meredith
Mazzilli and Chizu Nomiyama)