Oil price rises amid Iraq turmoil

The price of oil continued on its upward climb Friday as sectarian fighting in Iraq escalated, sending a chill through financial markets.

Prices neared $107 a barrel as the widening insurgency caused concern that crude supplies from Iraq, OPEC's No. 2 producer, may be devastated, The Associated Press reported.

Market confidence in the global oil supplier sent the price of crude to its highest level since September due to Islamist militants stretched their control in northern Iraq, and Kurdish forces on Thursday took control of parts of the capital in Kirkuk.

For now Iraq remains ahead of Iran in vying for OPEC's No. 2 spot, but the price hike is a troublesome development for the U.S. and other major economies, according to The Wall Street Journal (subscription required).

Dow Jones Industrial Average fell 109.69 points, while the S&P 500 index fell 13.78 points.

"Higher oil prices are certainly a tax on the economy, and that's probably a reason for the equity selloff," Nic Johnson, a portfolio manager who oversees commodity investments at Pacific Investment Management Co. in Calif. told the Journal.