* U.S. blames Russia for complicity in shooting down flight
* New European sanctions on Russia may heighten oil risk
* Iran faces pressure as nuclear deal lapses
By Jacob Gronholt-Pedersen
SINGAPORE, July 21 Brent crude held steady above
$107 a barrel on Monday with investors closely watching an
intensifying geopolitical crisis between Moscow and the West
over the downing of a civilian jet in Ukraine last week.
Still, investors seemed reluctant to build higher risk
premium into oil prices, with the risk of supply disruptions
from Russia looking limited for the time being.
U.S. Secretary of State John Kerry laid out on Sunday what
he called overwhelming evidence of Russian complicity in the
shooting down of Malaysia Airlines flight MH17.
President Vladimir Putin, however, has so far appeared
unconcerned about the increasing international pressure that
could lead to further sanctions against the world's top oil
"There is a fair way to go before the situation turns into
something that poses a more clear danger to disruption on oil
and gas supplies from Russia," said Ric Spooner, chief markets
analyst at CMC Markets in Sydney.
Brent crude for September deliver was up 4 cents at
$107.28 a barrel at 0405 GMT, while U.S. oil for August delivery
was down 11 cents to $103.02 a barrel.
The U.S. front-month contract expires on Tuesday.
"It seems likely we will see increased sanctions [on
Russia]from Europe, but depending on the nature of those and
given no further incidents, the chances are that the risk
premium will tend to unwind in the coming weeks," Spooner said.
Fresh U.S. sanctions on Russia last week, followed by the
downing of the Malaysia Airlines plane over Ukraine, revived
geopolitical concerns last week and pumped up global crude oil
But reduced worries over Iraqi oil supplies and weak
physical demand from European and Asian refiners struggling with
low processing profits have contributed to a more than 7 percent
drop in oil prices since a peak above $115 a barrel last month.
Potentially supporting oil prices, Iran is facing new
Western pressure to make concessions over its atomic activities
after it and six world powers failed to meet a July 20 deadline
for a deal to end a decade-old dispute.
But Iran has also moved to eliminate its most sensitive
stockpile of enriched uranium gas under an interim nuclear deal
reached last year, according to a monthly update by the U.N.
nuclear watchdog obtained by Reuters on Sunday.
In other signs of heightened tensions in the Middle East,
Israeli tanks shelled militant targets in the Gaza Strip on
Monday and a woman died in an air strike after the bloodiest day
for both sides of a nearly two-week military offensive.
Israel and the Gaza Strip have no oil production, but
investors often worry that any conflict between the two could
spread or escalate to involve key producers.
(Reporting By Jacob Gronholt-Pedersen; Editing by Tom Hogue)