Reuters reported that Brent crude rose towards USD 111 on January 16th 2012 on worries over supply disruptions after Iran warned Gulf Arab neighbors of consequences if they raised oil output to replace Iranian barrels facing international sanctions.

The latest threat comes as leaders of top Asian buyers of Iranian oil, China, Japan and South Korea, tour alternative Middle East suppliers while the United States pressures nations to stop importing oil from the Islamic Republic.

Yet gains were capped on concerns over demand after Standard & Poor's cut sovereign debt ratings of nine of the euro zone's 17 countries.

Brent crude gained 29 cents to USD 110.73 a barrel by 0529 GMT. The contract, which expires later in the day, posted a weekly loss of 2.36%. US crude rose 23 cents to USD 98.93 a barrel, after settling down 2.82% for the week.

Mr Ken Hasegawa, a derivatives manager with brokerage Newedge in Tokyo, said that "The United States is trying to persuade buyers to stop importing oil from Iran, while each country is studying its options, its situation. This situation will continue with high tension."

Saudi oil minister Mr Ali al Naimi said that the world's No 1 oil exporter is ready and able to meet any increase in demand. He made no direct reference to sanctions on Iran.

Mr Hasegawa said that the twin factors of supply and demand growth will keep oil trading in a tight range, with US crude staying between USD 95 and USD 105 a barrel. Without any fresh triggers, oil faces a downtrend after the benchmark touched a high for this year above USD 103.

(Sourced from www.reuters.com)