Oil prices rebounded above $27 a barrel as market players digested the US-British raid on the outskirts of Baghdad and watched for possible repercussions.
A barrel of Brent North Sea reference crude for April delivery rose to $27.40, up 51 cents from Friday's closing value, and then eased slightly.
"Basically we're up on the back of the Iraqi bombings," said one London trader at the International Petroleum Exchange (IPE).
At the moment there is not really that much to worry about, but obviously if it escalates out there we'll have to relook at that."
The prime fears remain that Iraqi exports could turn more unpredictable than ever as a result of the raid and that other Arab oil exporters could be tempted to use their crude as a political weapon in any resultant stand-off.
A second factor affecting the market today was fresh concern that OPEC could yet decide next month to cut output even further in order to buoy prices.
Demand for oil is expected to grow by less than previously forecast this year because of a global economic slowdown, further nagging at prices.
The London-based Centre for Global Energy Studies (CGES) said today there was a 50/50 chance of an OPEC output cut in March.
"If OPEC acts to keep prices high, then demand growth will falter and OPEC will enter a vicious circle of successive output cuts to defend an unsustainable price," it said.
AFP