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Oil prices rallied for a third consecutive day Friday as Sunni militants continued their advance toward Baghdad, stoking fears that Iraq is headed for civil war and its abundant oil exports could be in jeopardy.
Light, sweet crude for July soared to $107.68 a barrel in overnight trading, a nine-month high. The most actively traded contract recently traded up $0.14, or 0.1%, at $106.67 a barrel.
Early in Friday's session, Brent crude, the global oil benchmark, hit an intraday high of $114.69. That's up some $4 since the start of the week.
Worries are mounting over the world's oil supply amid the chaos in Iraq.
"We don't know yet what overall impact this will have on Iraqi imports," Money Morning Global Energy Strategist Dr. Kent Moors said to FOX Business. "There have been indications that some of the major Western companies currently developing fields in southern Iraq may be suspending activities." (Watch his full interview in the accompanying video).
Iraq, the seventh-largest oil producer in the world in 2013, produced some 3.6 million barrels of oil a day in February, its highest level since before the U.S.-led invasion in 2003, according to the U.S. Energy Information Administration. Moreover, Iran is the second-largest oil producer among the Organization of the Petroleum Exporting Countries (OPEC) members and accounts for roughly 4% of the global oil production.
Global supply and demand is already stretched due to reduced production in Libya and Iran. Additionally, shipments on an oil pipeline from Iraq to Turkey have been choked off since early March for geopolitical reasons. Plus, OPEC decided on Wednesday to maintain current production quotas, even though the group said it expects increasing demand to put upward pressure on oil prices.
Crude prices had largely traded in a tight range until recently. The escalating unrest in Iraq has definitely lured market participants back to the commodity.
With oil prices expected to continue to rise, what does this mean for oil stocks and ETFs?
Investing in Oil Stocks and ETFs Now