By Alex Lawler

LONDON (Reuters) -Oil rose for a third session on Wednesday as a halt to some exports from Iraqi Kurdistan raised concerns of tightening supply and as easing fears of a global banking crisis supported risk sentiment in the wider markets.

Crude exports of 450,000 barrels per day (bpd) from Iraq's semi-autonomous northern Kurdistan region were halted on Saturday following an arbitration decision that confirmed Baghdad's consent was needed to ship the oil.

climbed 42 cents, or 0.5%, to $79.07 a barrel by 0802 GMT, while West Texas Intermediate increased 61 cents, or 0.8%, to $73.81.

"The longer the stoppage continues, the tighter the supply outlook will become," said Stephen Brennock of oil broker PVM.

On Wednesday, Norwegian oil firm DNO said it had begun shutting down production at its fields in Kurdistan. The company's Tawke and Peshkabir fields averaged output of 107,000 bpd in 2022, a quarter of total Kurdish exports.

Also helping sentiment was easing worries over the banking sector after weeks of volatility in the market that had sent oil to a 15-month low on March 20, with investor nerves soothed by the sale of assets in collapsed lender Silicon Valley Bank.

"The recent rebound in oil prices is mainly driven by sentiment. We can see that risk sentiment has recovered to some extent, which pushed (the) global stock markets and crude oil rebound," said CMC Markets analyst Leon Li.

Oil also gained support from a drop in U.S. crude inventories. According to market sources citing American Petroleum Institute figures on Tuesday, crude stocks fell by 6.1 million barrels.

Attention will focus on official U.S. inventory data from the Energy Information Administration at 1430 GMT to see if it confirms the crude stock decline.