Brent Climbs Above $108/bbl on U.S.-Russian Tensions, Supply Fears


NEW YORK, July 25 (Reuters) - Brent oil prices reversed early losses to climb more than $1 a barrel on Friday, as fighting in Ukraine and deteriorating relations between Russia and the United States ignited new fears of supply disruptions in the market.

A Russian security official said that up to 40 shells fired on Friday by Ukrainian forces fell on the Russian province of Rostov, near the border with eastern Ukraine where Kiev is fighting pro-Russian separatists.

Brent crude led a mid-morning spike in prices shortly after Reuters reported that EU sources said European Council leader Herman van Rompuy has written to EU leaders saying any restrictions the bloc agrees on Russian access to sensitive technology should exclude natural gas.

While that news did not appear to pose a particular threat to oil flows, traders said it helped kick off a flurry of covering ahead of any further tension this week.

"The escalation of hostilities is stoking supply fears, as the energy card is waiting to be played by Russia and the West as a way to inflict economic harm on each other," said John Kilduff, a partner at Again Capital LLC in New York.

Brent crude for September delivery rose $1.32 to settle at $108.39 a barrel, the highest settlement since July 10. Friday's rally pared a series of recent losses, with Brent ending almost 1 percent higher from the beginning of the week.

U.S. crude for September delivery gained 2 cents to settle at $102.09 a barrel, after falling as low as $101 a barrel earlier in the session. It ended the week 1 percent lower.


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