Threats to the region’s oil supplies helped Brent make its strongest third-quarter performance since 2004.
Brent was up 4 cents to $57.45 a barrel by 2:16 p.m. (1816 GMT) , heading for a fifth weekly climb and a nearly 10 percent gain for September.
The contract had reached its highest in more than two years earlier in the week, resulting in a fifth consecutive weekly gain. This performance is Brent’s longest weekly bull run since June 2016.
U.S. crude ended Friday’s session up 11 cents at $51.67 a barrel. The contract posted a fourth consecutively weekly gain and rose 12 percent in the third quarter.
“We’ve seen a strong rally in the past month on the expectation that we are seeing strong demand,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut, adding: “With the geopolitical risk in Kurdistan, Brent pushed to a two-year high. I think the market rally is looking to be a little overdone.” Iraq’s Kurds endorsed secession by nine to one in a referendum on Monday that has angered Turkey, the central government in Baghdad, and other powers, who fear the vote could lead to renewed conflict in the oil-rich region.
Iran has banned transportation of oil products by Iranian companies to and from Iraq’s Kurdistan region, the semi-official Tasnim news agency said on Friday.
“No rapid solution to the crisis can be expected, which should continue to lend support to the oil price,” analysts at Commerzbank wrote.
Turkish President Tayyip Erdogan called the vote illegitimate and has threatened to break with past practice and deal only with the Baghdad government over oil exports from Iraq.
Erdogan said this week he could use force to prevent the formation of an independent Kurdish state and might close the oil tap.
Most oil that flows through a pipeline from Iraq to Turkey comes from Kurdish sources and a cut-off would severely damage the Kurdish Regional Government, which relies on sales of crude for almost all its hard currency revenues.
The Kurdish region exports about 500,000 barrels a day through the pipeline. So far, oil flows through the pipeline have been normal.
“(There is) an increasingly positive view from the supply side, with potential Kurdish production disruption, and a plethora of energy agencies suggesting global demand is increasing,” said Jeffrey Halley, senior market analyst at OANDA in Singapore.
Oil price gains have also been supported this month by anticipated renewed demand from U.S. refiners that were resuming operations after shutdowns due to Hurricane Harvey.
However, Middle Eastern oil producers are concerned the recent price rise will incentivize more U.S. shale production and push prices lower again.
In addition, oil output from the Organization of Petroleum Exporting Countries has risen this month by 50,000 barrels per day (bpd), a Reuters survey found, as Iraqi exports increased and production edged higher in Libya, one of the producers exempt from a supply-cutting deal.
U.S. energy companies added oil rigs for the first week in seven after a 14-month drilling recovery stalled in August as crude prices were on track for their strongest third quarter in 10 years.
The U.S. oil rig count, however, is down for the second month in a row and posted its biggest monthly and quarterly declines since the second quarter of 2016.
Drillers added six oil rigs in the week to Sept. 29, bringing the total count up to 750, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.