Oil pauses amid simmering geopolitical tensions

Brent North Sea crude for delivery in April rose nine cents to $102.68 a barrel

World oil prices paused on Friday at the end of a volatile week in which simmering tensions in the Middle East and North Africa sent the market to a two-year peak above $104 per barrel.

Brent North Sea crude for delivery in April rose nine cents to $102.68 a barrel in early afternoon deals as traders also shrugged off news of fresh monetary tightening in China.

New York's main contract, light sweet crude for March, slipped 15 cents to $86.21.

"As anti-government protests have spread from Tunisia and Egypt to the streets of Bahrain, Yemen and OPEC member countries Algeria, Libya and Iran, concerns about geopolitical risk and the potential for supply disruptions have returned aggressively to the global oil market," said Deutsche Bank oil analyst Soozhana Choi.

"While disruptions have not been reported thus far, immediate market fears centre on the fact that these five countries -- Bahrain, Yemen, Algeria, Libya and Iran -- represent ten percent of global crude oil production," she added.

Financial markets were additionally worried by Iran's reported efforts to send naval ships into the Mediterranean.

Demonstrators in various Arab states have drawn inspiration from pro-democracy protests that led to the recent oustings of leaders in both Tunisia and Egypt.

Fourteen people were killed in clashes between security forces and anti-government protesters in Libya's second city Benghazi, a local hospital source told AFP on Friday.

Elsewhere, Angry Bahraini Shiites buried four killed in a violent police raid on anti-regime protesters as the army enforced a tight clamp across the capital of the Sunni-ruled Gulf monarchy.

In Yemen, clashes between police and anti-regime demonstrators in the southern city of Aden killed three, medics said, as more protests were expected in the capital Sanaa after Friday weekly prayers.

In Algeria, meanwhile, senior former regime leader Abdelhamid Mehri urged President Abdelaziz Bouteflika to implement sweeping political changes as pro-democracy protests took root in the country.

"Beyond the immediate fears, more far-reaching concerns are that the unrest in these countries could spread to their neighbours which represent a far larger share of global oil production," said Choi at Deutsche Bank.

"The Middle East alone represents 30 percent of global crude oil production; including North Africa the region combined represents 35 percent of global crude oil production."

Brent oil jumped to $104.52 on Wednesday -- its highest level since late September 2008 -- after Israel said Iran was sending two warships into the eastern Mediterranean.

Israeli Foreign Minister Avigdor Lieberman said two Iranian warships were sailing north in the Red Sea headed for the Suez Canal, intensifying concern about tensions in the Middle East.

Iranian warships have not entered the Mediterranean through the canal since 1979 and Israel said any attempt to sail so close to its waters now would be a dangerous "provocation" that would demand a response.

Since protests erupted in Egypt in late January, the price difference between the New York and Brent contracts has expanded dramatically.

Traders bought up Brent on worries that any disruptions to Middle East supplies would affect the main European market, while the New York contract was weighed down by abundant US supplies that raised concerns about weak demand.