LONDON: Crude prices firmed on Tuesday, extending sharp gains from the previous session amid supply disruption risks from Iraqi Kurdistan and hopes that turmoil in banking is being contained.

Brent crude futures gained 61 cents, 0.8%, to $78.73 a barrel by 1006 GMT. West Texas Intermediate U.S. crude was up 53 cents, or 0.7%, to $73.34 a barrel.

Prices rallied over $3 on Monday after Iraq was forced to halt exports of around 450,000 barrels per day from its northern Kurdistan region through Turkey, following an arbitration decision that confirmed Baghdad’s consent was needed to ship the oil.

Monday’s announcement that First Citizens BancShares Inc will acquire deposits and loans of failed Silicon Valley Bank spurred optimism about the banking sector and sent European bank shares higher.

“At the moment concerns about the risk to financial stability has been relegated to the back of investors’ mind but another bank run could trigger a flight out of risk again,” PVM Oil’s Tamas Varga said.

Oil settles down on worries over banks, US crude reserve

Oil prices were also expected to draw continued support from signs of recovering demand in China.

China’s crude oil imports are expected to rise 6.2% in 2023 to 540 million tonnes, an annual forecast by a research unit of China National Petroleum Corp showed on Monday.

Russian Deputy Prime Minister Alexander Novak said on Tuesday that Russia needed to focus on boosting energy exports to so-called “friendly” countries and noted Russian oil supply to India jumped 22-fold last year.

U.S. crude oil stockpiles were seen rising about 200,000 barrels last week, a preliminary Reuters poll showed on Monday.

The American Petroleum Institute (API), an industry group, will publish its inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday and the U.S. Energy Information Administration at 10:30 a.m. (1430 GMT) on Wednesday.