* Pro-Russian rebels hold 7 European monitors hostage
* U.S. to expand sanctions on Russia over Ukraine on Monday
* Zueitina port still closed as Libyan govt assesses damages
* Brent-WTI gap narrows but still near $9/bbl
By Florence Tan
SINGAPORE, April 28 (Reuters) - Brent edged up toward $110 a barrel on Monday as tensions rose in Ukraine and Libya delayed the re-opening of a damaged eastern port.
The United States and Europe are preparing new sanctions against Russia as tensions escalated in eastern Ukraine. Pro-Russian rebels paraded European monitors they are holding on Sunday, freeing one but saying they had no plans to release another seven.
June Brent crude was at $109.78 a barrel, up 20 cents, by 0155 GMT after settling down 75 cents on Friday.
U.S. crude for June delivery added 32 cents to $100.92 a barrel. On Friday, the contract settled at its lowest level since April 7, due to pressure from all-time high crude inventories recorded in the week of April 18.
"If the conflict between the countries escalates, increased fuel demand for military use and heightened risk of disruption will likely continue to strengthen global oil prices," Barclays analysts said in a note over the weekend.
Russia's oil pipeline monopoly Transneft said last week it was worried Ukraine may take control of its oil product pipeline to Hungary.
Russia is unlikely to use oil as a political weapon, but investors remained cautious about the risks stemming from the east-west crisis, said Yusuke Seta, a commodity sales manager at Newedge Japan.
In Libya, the government is assessing damage at the eastern oil port of Zueitina following an eight-month oil blockade. Zueitina is one of two ports which were due to re-open after the government struck a deal with rebels three weeks ago.
"They are unable to increase exports yet and hence it's a little bit supportive for Brent," Newedge's Seta said.
U.S. crude narrowed the gap with Brent CL-LCO1=R slightly to $8.86 a barrel after it stretched as wide as $9.28 on Friday.
Analysts blamed record crude inventories in the United States for depressing U.S. crude prices despite a rise in refinery utilisation rates.
"The crude stocks in the U.S. have been mounting rapidly and only that of PADD 2, including Cushing, has been decreasing," Seta said.
Crude inventories are unlikely to be drawn down quickly as U.S. gasoline demand remained limited, he said.
"The flow from Cushing to the Gulf coast should stop at some point and that means inventories at Cushing should increase again. This is a bearish factor for WTI," Seta said.
Reporting by Florence Tan; Editing by Richard Pullin