By Cassie Werber 

LONDON--Oil prices headed higher on Friday, supported by rising tension in Ukraine.

Ukraine on Thursday accused Russia of invading its territory, sending Russian troops to fight alongside rebels in eastern Ukraine.

Yet the increase in prices has so far been slight, as investors bet that it is in the interests of both Russia and Europe to keep oil shipments flowing, despite the escalating conflict--even if the U.S. and Europe impose a new round of sanctions on Russian exports.

"It is extremely unlikely that Russia would suspend oil shipments in the event that further sanctions were to be imposed," Commerzbank analysts said in a research note.

For several months, Western leaders have said a Russian invasion of eastern Ukraine would prompt harsher economic strictures on Russia. But President Obama has also made clear that the U.S. and its allies won't intervene militarily to stop Russian forces.

Political and military tension in other parts of the world, particularly the Middle East, has also had a limited effect on prices because there is so much oil in the system.

Iraq, which produces 2.6 million barrels of oil a day, has continued to pump oil even while it has been under siege from Islamic State forces.

Bank of America Merrill Lynch analysts said that oil prices could rise by as much as $40-$50 per barrel if production in Southern Iraq is lost, but added that "the risk of this is very low in our view."

Oil for October delivery is up 41 cents at $102.87 a barrel on ICE Futures Europe. West Texas Intermediate for October is up 54 cents at $95.09 on the New York Mercantile Exchange.

ICE gas oil for September changed hands at $866.50 a metric ton, up $1.50. Nymex gasoline was up 98 points at $2.6006 a gallon.

Gregory L. White in Moscow contributed to this article.

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