By Christopher Johnson
Benchmark Brent crude oil was up 10 cents at $72.91 a barrel by 0930 GMT. U.S. light crude was unchanged at $67.63 a barrel.
Turkey's financial crisis has raised the risk of contagion throughout emerging economies, dragging down South Africa's rand, Argentina and Mexico's pesos as well as the Russian rouble. It has also dented emerging market stocks while curbing growth and the outlook for oil demand.
This is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world's biggest economies.
Turkey is a relatively small oil consumer, accounting for less than 1 million barrels per day (bpd) or around 1 percent of global demand, but Commerzbank analyst Carsten Fritsch says the impact of the Turkish crisis could be considerable.
"The direct impact on global demand for oil is negligible," Fritsch said. "If the crisis spread to other, larger (emerging) countries, though, demand would be hit considerably."
Hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending Aug. 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Phillip Futures said that hedge funds had cut bullish bets on oil because of "rising production levels from OPEC and the United States".
U.S. energy companies last week increased their number of active oil rigs by the most since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm. [RIG/U]
That was the highest level of drilling activity since March 2015.
Despite the cautious mood in oil markets, bullish sentiment found some support from expectations that U.S. sanctions against Tehran would restrict Iranian crude exports, tightening global supply.
The United States has started implementing new sanctions against Iran, which from November will also target the country's petroleum sector.
Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries, behind Saudi Arabia and Iraq, pumping 3.65 million bpd in July, Reuters data show. [OPEC/O]
"There are lots of variables in the oil market, the most important of which is Iran," said Tamas Varga, analyst at London brokerage PVM Oil Associates.
"If 1 million bpd or more of Iranian exports go AWOL, the current fragile supply-demand balance will be upended, potentially sending oil prices above the May peak."
(Reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by David Goodman and Adrian Croft)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)