The jihadists extended their lightning advance to towns only about an hour's drive from Baghdad while trucks carrying Shi'ite volunteers in uniform rumbled towards the front lines to defend the city, stoking concerns of prolonged unrest and bloodbath.
Brent hit a session high of $114.69 a barrel, its loftiest since September last year.
It was up $1.57 to $114.59 by 0754 GMT.
It ended up with gains of more than $3 on Thursday.
US crude touched an intraday high of $107.68, also a nine-month top, and was up 97 cents at $107.50, extending the previous session's $2.13 gain.
Brent is set to gain more than 5 percent this week, the biggest weekly rise since July 2013, while US crude is on track for an almost 5 per cent rise, its best since December.
"There have been no disruptions to oil supplies so far but people are very nervous," said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan, referring to worries that escalating violence in Iraq could disrupt oil supplies from the second-largest OPEC producer.
The forces of Iraq's autonomous ethnic Kurdish north have taken control of the oil hub of Kirkuk as the troops of the Shi'ite-led government abandoned posts.
"Oil is now in a new price territory and is likely to climb more as investors rework their positions, supported by the uncertainty and technicals," Hasegawa said.
Given the break past key resistance at $105 a barrel, the US benchmark may rise towards $112 over the next two weeks, the high touched last year, if it manages to break past the next ceiling of $110,
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