Crude oil prices have reached a three-year high of $111 a barrel due to fears of a supply shock as a result of al-Qaeda militants taking full control of Mosul, Tikrit and Samarra, and now moving close to the capital, Baghdad. The government forces have been seen fleeing from the Sunni-Muslim al-Qaeda areas.

In morning trading in London, Brent crude rose to $111.19.This jump is by a full percent,which means that due to the violence, 3.5m barrels per day of Iraqi exports could be knocked out of the market. It seems $111.19 a barrel will be the highest level for a front-running contract since March 3, when the front-running contract settled at $111.20 due to tension between Russia and the Ukraine.

However, Iraq's oil minister, Abdul Kareem Luaibi, said that most of the country's crude was pumped out from fields in the Shia-Muslim dominated South, where export facilities are "very, very safe". He issued the statement on Wednesday in Vienna where he was attending a gathering of the 12-member Organisation of Petroleum Exporting Countries (OPEC).

Meanwhile, violence continued in the north of Iraq on Thursday too. Market sources are concerned that this violence could spread toward the producing fields in the south as well. This concern itself has led to Brent prices soar by around $2 in the last 24 hours.

It is reported by CNN that a spokesman for ISIS reportedly made an audio recording on Thursday that threatened a takeover of more cities, including Baghdad. On this Iraqi Foreign Minister HoshyarZebari said his country faces a "mortal threat" from the ISIS insurgents.