US benchmark West Texas Intermediate (WTI) for August delivery rose 70 cents to $106.73 in mid-morning trade after jumping nearly a dollar in early trading. It had slipped 14 cents in New York trade.

Brent crude for August eased 41 cents to $114.05.

The Wall Street Journal reported late Tuesday that Washington has "cleared the way for the first exports of unrefined American oil in nearly four decades".

Citing rulings that have not yet been announced, the newspaper said the Commerce Department has given two companies -- Pioneer Natural Resources and Enterprise Products Partners LP -- permission to ship a type of ultralight oil known as condensate for foreign buyers.

The shipments could begin as soon as August, the paper said, citing people familiar with the matter.

"There have been some expectations for the ban on exports to be lifted and investors will now be watching to see if transportation links are up to mark to move supplies," Desmond Chua, market analyst at CMC Markets in Singapore, told AFP.

Producers have long been clamouring for the US government to lift the ban on exports with crude stockpiles near record levels, but less-than-satisfactory transportation links could still hinder the outflow of supplies from storage hubs.

The US-to-Canada Keystone XL pipeline project has pitted environmental groups against the oil industry, which has argued that it will bring much-needed jobs and help fulfill the US goal of energy self-sufficiency.

Chua said investors are still monitoring the crisis in crude-producer Iraq, despite fading fears that it could result in a major supply disruption.

"Unless we see any major disruption to Iraqi oil assets in the south, we aren't going to see further risk premium associated with the crisis," he said.

Jihadist insurgents have captured swathes of Iraqi territory in a lightning offensive that began on June 9, but they have yet to directly threaten the key oil-producing region in the south.