May 2 (Bloomberg) -- Crude oil rose for the first time in four days as Turkey renewed its offensive against Kurdish rebels in Iraq, holder of the world's third-biggest oil reserves.

Turkish warplanes pounded suspected positions of the militant Kurdish Workers' Party in Iraq's oil-rich north. Exxon Mobil Corp. is set to restore 860,000 barrels a day of output in Nigeria, fifth-largest exporter to the U.S., after the conclusion of an eight-day workers' strike.

``Even though this Turkish invasion hasn't done anything to the supply side, there is the risk premium that violence will spread to southern Iraq, which is more important for oil,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo.

Crude oil for June delivery rose as much as $1, or 0.9 percent, to $113.52 a barrel on the New York Mercantile Exchange, trading for $113.24 as of 12:06 p.m. London time.

Oil has declined 5.5 percent from a record near $120 a barrel as the U.S. dollar index, a measure of six currencies, near seven-week high. The U.S. currency is heading for back-to- back weekly gains against the euro for the first time this year on speculation the Federal Reserve will stop cutting interest rates.

``I could see a scenario in the next week where the euro breaks below the $1.50 level, and if that happens crude could easily break below $100,'' said Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp.

The dollar was little changed at $1.5463 against the euro as of 11:47 a.m. London time.

`Purely Speculative'

``There's probably a $20 to $30 component to crude oil prices that's purely speculative that could be taken out of the market temporarily,'' Woolfolk said.

Brent crude oil for June settlement advanced as much as $1.22, or 1.1 percent, to $111.72 a barrel on London's ICE Futures Europe exchange. The contract traded at $111.53 at 12:06 p.m. London time.

The contract dropped 86 cents, or 0.8 percent, to $110.50 yesterday, the lowest close since April 14. It reached a record $117.56 on April 25.

Russia, the world's second-largest oil supplier, produced the least amount of crude in 18 months in April as aging fields and rising costs threaten the country with the first annual decline in oil output in a decade.

Production dropped to 9.72 million barrels a day, according to data released today by CDU TEK, the dispatch center for the Energy Ministry.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: May 2, 2008 07:08 EDT