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Oil steady as Libya, Kurdish worries offset by Greek woes

Oil tankers are seen parked at a yard outside a fuel depot on the outskirts of Kolkata February 3, 2015. REUTERS/Rupak De Chowdhuri

LONDON/NEW YORK (Reuters) - Oil prices were little changed on Monday after touching their highest nearly two months, as gains in the dollar following the collapse of Greek debt talks offset growing violence in Libya and concerns over exports from Kurdistan.

The U.S. dollar index reversed early losses to trade higher by midday on Monday after talks between Greece and euro zone finance ministers broke down when Athens rejected a proposed six-month extension of its bailout.

In thin activity, oil prices had earlier pushed to a new 2015 high amid supply worries in two big oil producers.

Egypt bombed Islamic State targets inside Libya on Monday and Cairo renewed calls for a U.S.-led coalition to confront militants there a day after the group released a video appearing to show the beheading of 21 Egyptians.

In Iraq, a deal aimed at resolving a dispute between Baghdad and Kurdish authorities over oil export revenues looked fragile after Kurdish Prime Minister Nechirvan Barzani cautioned Baghdad against breaking its side of the bargain. The December pact allowed for shipping some 550,000 barrels per day of oil.

"The geopolitical risk is not something to write off," said Olivier Jakob, oil analyst at Petromatrix in Zug, Switzerland.

Benchmark Brent futures slipped 3 cents to $61.49 a barrel by 3 p.m. EST (2000 GMT) after reaching an intra-day peak of $62.57 a barrel, the highest since Dec. 22.

Prices, which have fallen from $115 in June due to an oil glut, have rebounded by nearly 40 percent from their lows a month ago, aided by a sharp fall in U.S. oil drilling.

U.S. March crude futures were unchanged at $52.78 a barrel, with trading volume of just over 100,000 lots, about one-fifth the recent norm due to U.S. Presidents Day. Monday's activity will be registered on Tuesday due to the holiday.

Libya's oil production has mostly shut down, falling to 350,000 bpd, from 1.6 million bpd before the 2011 ousting of leader Muammar Gaddafi.

Iraq's southern oil exports have also fallen sharply to below 1.5 million bpd in the first two weeks of February, shipping data tracked by Reuters showed.

And now, northern exports are in question following Sunday talks with Kurdish authorities, even though both sides reaffirmed their commitment to the temporary pact in December.

"If they don't send the budget, we won't send oil," Barzani said in comments published by Rudaw online newspaper.

Further supporting the market, Kuwait's oil minister Ali al-Omair said oil prices would continue to rise this year as supply fell, with the current oil surplus already "definitely lower" than 1.8 million bpd.

(Additional reporting by Henning Gloystein in Singapore, Tom Arnold and Ahmed Haggagy Kuwait, Jack Stubbs in London, Jonathan Leff in New York; Editing by Dale Hudson, Jason Neely and Marguerita Choy)