NEW YORK, June 23 (Reuters) - Brent crude recorded its largest one-day decline in seven weeks on Monday, falling toward $114 a barrel as oil exports from Iraq remained unaffected by Islamic insurgents' continued advance on Baghdad.
Oil prices rallied nearly five percent amid the crisis in Iraq this month, touching nine-month highs above $115 a barrel last week, but have since faded.
"This reminds me of the Syrian conflict when the market spiked on worries about supply disruptions that never happened," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. "The supply news isn't really supporting oil prices - the only thing supporting them is the fear factor."
Brent fell 69 cents to settle at $114.12 it's biggest percentage drop since May 6. U.S. crude for August delivery dropped 66 cents to settle at $106.17, its biggest slide since May 2.
The situation in Iraq pushed Brent futures to $115.71 a barrel last Thursday, the highest level since Sept. 9, 2013.
The spread <CL-LCO1=R> between the two benchmarks further narrowed to close at $7.95, after it had widened to $9.01 last week.
Iraq ships 90 percent of its crude exports from southern terminals, which are far from the Sunni insurgency. The country's oil exports in June were near record rates at around 2.53 million barrels per day, data showed on Monday.
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