Oil markets rallied for a third straight session as Sunni militants continued their advance toward Baghdad, fueling fears that Iraq's ample oil production could be threatened.

Light, sweet crude for July delivery rose as high as $107.68 a barrel in overnight trading on the New York Mercantile Exchange, a nine-month intraday high, and recently traded up 14 cents, or 0.1%, at $106.67 a barrel.

Brent crude, the global benchmark, traded up 15 cents, or 0.1%, at $113.17 a barrel, down from an intraday high of $114.69 a barrel, on ICE Futures Europe. Brent prices are also at nine-month highs.

Insurgents seized Iraq's second-largest city this week and have threatened to march on Baghdad. Though most of Iraq's production is in the south of the country, far from the current violence, market watchers worry that the situation could quickly escalate.

Iraq produced 3.6 million barrels of oil a day in February, its highest level since before the U.S.-led invasion in 2003. The nation was the seventh-largest oil producer in the world last year, according to the U.S. Energy Information Administration.