Brent crude advanced by 20 cents to $58.02 a barrel (bbl) by 6:35 a.m. CST (11:35 GMT), up by about a third from its mid-year levels.
Asian shares advanced to new highs on Monday following Wall Street's lead, while US oil futures jumped to hover near a six-month peak as escalating tensions between the Iraqi government and Kurdish forces threatened supply.
The euro slumped 0.2 percent to $1.1798, while the dollar index rose 0.16 percent as investors repositioned following disappointing inflation data on Friday that sent the greenback lower.
Escalating tensions between Iraq's central government and the semi-autonomous Kurdish region have boosted crude prices in recent days, amid concerns the conflict could crimp exports from the area.
"The security premium built into prices from the (Iraqi-Kurdish) situation is in the process of vanishing", said John Kilduff, partner at Again Capital LLC in NY.
Analysts forecast US crude inventories declined by about 4.2 million barrels in the week to October 13.
Tension between the United States and Iran is also rising, increasing the global risk premium for oil.
U.S. West Texas Intermediate (WTI) crude futures traded at $52.09 a barrel, up 21 cents on the day. U.S. President Donald Trump declined to certify Iran's submission over a nuclear deal, leaving Congress a couple of months to decide further action against Tehran. It last stood at $7,110.5.
The Organization of the Petroleum Exporting Countries, OPEC, made their decision to extend cuts in oil output by nine months by March 2018, delegates said.
"In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of USA secondary sanctions". E&P reports in its article Oil Prices Build As Iraq, US-Iran Tension Raises Risks that after months of rangebound trading, during which OPEC-led supply cuts supported crude but rising USA output capped markets, prices have made significant gains this month.
OPEC and 10 producers outside the cartel, including Russian Federation, first agreed late previous year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating global oversupply and boosting prices.
However, without the support of other countries, it appears unlikely that production would fall by 1 million barrels per day to the levels before Western sanctions were imposed on the country, Goldman said.
We see Brent averaging $54 this quarter and $52.50 per barrel in 1H18, compared with our previous forecasts of $50 and $49.50 per barrel, respectively, Bank of America Merrill Lynch said.
Olivier Jakob, an oil analyst at consultancy PetroMatrix, said he didn't expect more upside from the existing worldwide tensions.