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Oil rises on Middle East tensions

Monday, October 22 12:28:31

Brent crude oil climbed towards $111 per barrel today as fighting in Beirut and Gaza raised fears for the security of fuel supplies from the Middle East, helping stem a four-day decline in prices.

Brent lost 4 percent last week on global economic uncertainty. But growing violence in parts of the Middle East, which supplies a third of the world's oil, has helped counter concerns over weaker fuel demand.

Brent crude for December delivery rose 33 cents to $110.47 per barrel by 1055 GMT, recovering from a session low of $109.47, its weakest since Oct. 4.

U.S. oil was up 48 cents at $90.53, also bouncing back from an intraday trough of $89.49.

Tensions surrounding Syria supported oil prices due to fears that violence could spread to other parts of the Middle East.

Tiny Lebanon, with its combustible sectarian mix, is being dragged into the Syria crisis with its rival Shi'ite and Sunni Muslims fighting on opposite sides.

Gunmen exchanged fire in Beirut after the state funeral of an assassinated Lebanese intelligence chief ended in violence when angry mourners broke away and tried to storm the offices of Prime Minister Najib Mikati.

Lebanon's army said on Monday it would take "decisive measures" to prevent chaos in areas of high tension.

"Lebanon has now become a new seat of unrest," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

"(The tensions) destabilise the whole region and therefore have an impact on oil transportation, especially the oil from northern Iraq, which is transported through pipelines over the crisis region," Fritsch said.

Elsewhere Israeli forces killed two Palestinian militants during an incursion in the northern Gaza Strip on Monday that touched off clashes with gunmen from the governing Hamas movement, local officials said. (C ) Reuters