* Ukraine could push Brent to $111, U.S. crude to $102 -
* Saudi's Naimi says would supply oil to overcome any
* EU could strengthen sanctions over Ukraine
By Keith Wallis
SINGAPORE May 12 Brent crude futures firmed
above $108 per barrel on Monday, supported by renewed tensions
in Ukraine, where the conflict looks increasingly out of control
and heightening the risk of disruption to energy supplies.
Pro-Moscow rebels claimed a resounding victory in Sunday's
referendum on self-rule for eastern Ukraine with nearly 90
percent voting in favour.
"If we see there's more escalation in Ukraine it will
support U.S. prices back up to $102 this week. If U.S. is $2
more than the current price, Brent will be $2.50-$3 more," said
Jonathan Barratt, chief executive of Sydney-based commodity
research firm Barratt Bulletin.
Brent crude for June delivery was up 34 cents at
$108.23 by 0411 GMT after touching a 1-1/2-week high of $109.02
U.S. June crude gained 11 cents at $100.10 a barrel
afer peaking at $101.18 in the prior session, also a 1-1/2-week
Saudi Arabia is willing to supply oil if there are shortages
due to tensions over Ukraine, oil minister Ali Al-Naimipi said
in the South Korean capital on Monday, where he is attending a
The key to the Ukraine crisis is whether the "conflict
develops into civil war rather than drags in Russia and the
European Union or Russia and the U.S.," Barratt said.
There would be wider implications for European energy
supplies if Russia became directly involved, Barratt added.
The European Union, which called Sunday's plebiscite
illegal, could strengthen sanctions against Russia after Moscow
annexed Ukraine's Crimea region following a similar vote in
Foreign ministers from the 28-nation bloc are due to meet on
Monday to decide whether to add about 15 people and several
Crimean-based companies to its list 48 Russians and Ukrainians
already targetted with asset freezes and visa bans.
Investors are also keeping an eye on industrial production
and retail sales data which China will release on Tuesday. "I
expect industrial production to be softer," Barratt said.
"The premier [Li Keqiang] came out at the weekend that China
had to get used to 7.5 percent growth as the new norm. It's
about the third time he's said this," Barratt said. Such lower
growth compared with the 10 percent in previous years would
"weigh heavily on oil prices".
Negotiators from Iran and the International Atomic Energy
Agency will meet in the Austrian capital Vienna on Monday, a day
before talks resume between Tehran and six western nations over
Iran's nuclear programme.
The two sets of talks are separate but closely linked as
both focus on fears that Iran may be covertly seeking the
capability to develop nuclear weapons.
(Reporting by Keith Wallis; Editing by Ed Davies)