Meanwhile, West Texas Intermediate crude rose by 19 cents to Dollars 52.07 while global benchmark Brent was up 37 cents at USD 58.25 a barrel. WTI crude oil continues to trade higher on Tuesday morning, gained 0.50% to trade at $52.12.
Oil jumped nearly 3% over the past two sessions as weeks of tensions following a Kurdish independence referendum flared into open conflict in the Kirkuk region.
Approximately one million barrels per day (bpd) of oil were cut from the global market during the previous round of sanctions against Iran. "Geopolitics and specifically geopolitical tensions have returned to the fore after being fanned by unrest in Iraq and rising hostility between the US and Iran", Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd, wrote in a note Wednesday.
"In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of U.S. secondary sanctions".
The Iraqi government also plans to increase oil production from the region to more than a million barrels per day, with a foreign oil company to be contracted to implement the plan, according to the minister.More news: Virginia Polls Show Northam's lead in Governor Race
Flows of crude from northern Iraq through the Turkish port of Ceyhan have slumped, a port agent said Wednesday, a sign that fighting between the Baghdad government and Kurdish forces may be having a larger-than-expected impact on output in the oil-rich Kirkuk region.
Asked about the conflict in Iraq between the government and separatist Kurds and the U.S. decision to decertify its nuclear deal with Iran, Birol said it is premature to assess the impact of these geopolitical risks on oil markets.
"In the case of Kurdistan, the 500,000 bpd Kirkuk oil field cluster is at risk with initial reports that 350,000 bpd has shut in, although this remains unclear, "Goldman Sachs said on Tuesday". Last Friday U.S. President Donald Trump refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran. "These issues remind us oil and geopolitics are very much interlinked and it will remain so".
Analysts said traders built fresh positions following crude oil prices jumping in Asian trade as data showed a drop in U.S. stockpiles.
The upbeat forecast for oil demand growth, however, was offset by a rise in OPEC production by 90,000 barrels a day, fueling concerns that OPEC compliance with the deal to curb output is starting to wane.More news: How to Watch Patriots vs. Jets
The American Petroleum Institute (API), an industry trade group, will release US weekly petroleum inventory data at 4:30 p.m. EDT (2030 GMT), ahead of the government's report on Wednesday.
The euro traded at $1.1782, slightly down from the previous day.
The collapse in global oil prices has cost the Organization of the Petroleum Exporting Countries (OPEC) over Rs 65 trillion since mid-2014.
We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel, respectively, Bank of America Merrill Lynch said.More news: Facebook now adds direct food-ordering feature