* Brent hits highest in more than a week
* U.N. approves military action in Libya
* Saudi King to issue decrees after Friday prayers
* Joint central bank intervention against yen
(Recasts throughout, previous SINGAPORE)
By Nia Williams
LONDON, March 18 (Reuters) - Oil rose more than $2 a barrel
on Friday after the United Nations approved military action to
contain Libyan leader Muammar Gaddafi, heightening geopolitical
tensions in the oil-rich Middle East.
Front-month Brent <LCOc1> rose $1.06 to $115.96 by 0942 GMT,
after earlier climbing above $117, the highest level in just
over a week. U.S. crude for April <CLc1> gained $1.37 to
$102.79. It also rose more than $2 earlier in the session.
"The apparent move into a military endgame in Libya,
together with the passing of the U.N. resolution and the
escalation created by external involvement, is likely to
represent the most immediate source of upside price risk for
oil," Barclays Capital analysts said in a note.
The U.N. Security Council, meeting in emergency session on
Thursday, passed a resolution endorsing a no-fly zone to halt
government troops now around 100 km (60 miles) from Benghazi,
which Gaddafi threatened to storm showing "no mercy, no pity."
The U.N. also authorised "all necessary measures" -- code
for military action -- to protect civilians against Gaddafi's
forces. []
Analysts said the involvement of foreign troops and likely
escalation in violence would further delay the return of Libya's
1.6 million barrels per day (bpd) of light, sweet crude to the
market.
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Libya no-fly zone graphics http://link.reuters.com/wub68r
More on Middle East unrest: [] []
Western forces in region http://link.reuters.com/jen38r
Latest graphic: http://r.reuters.com/nym77r
Interactive factbox http://link.reuters.com/puk87r
Graphic on air bases http://link.reuters.com/zyk48r
Graphic on missile defences http://link.reuters.com/wem48r
Graphic on no-fly zone http://link.reuters.com/wub68r
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At the same time, the situation remained volatile in
Bahrain, where earlier this week the authorities
cracked down on Shi'ite protesters demanding reform by the Sunni
monarchy, drawing criticism from the United States and Iran.
The involvement of Saudi Arabian troops and other forces
from Gulf Cooperation Council (GCC) countries also raised
tensions in Bahrain, which lies less than 100 kilometers from
the hub of the Saudi oil industry. []
Saudi Arabia's King Abdullah will address the nation at 1100
GMT on Friday to issue a number of decrees, the royal court said
in a statement released by the top oil producer's state news
agency late on Thursday.
JAPAN DISASTER
Japan's strongest earthquake on record a week ago and
resulting nuclear crisis sent risk-averse sentiment coursing
through global financial markets and has triggered some selling
on volatile oil markets.
Engineers said on Friday burying a crippled nuclear plant in
sand and concrete might be the only way to prevent a
catastrophic radiation release, the method used to seal huge
leakages from Chernobyl in 1986. []
Edward Meir, senior commodities analyst at brokers MF
Global, said oil prices might have risen too far considering the
loss of demand from Japan, the world's third largest economy and
third biggest oil consumer after the United States and China.
"The extended paralysis with regard to the nuclear issue and
the colossal damage sustained in the rest of the country
suggests that Japan will be partially absent from the oil
markets for some time to come," he said in a note.
Japan bought billions of dollars to restrain a soaring yen
on Friday, and traders reported intervention by European Central
Banks to try to calm financial markets reeling from the
earthquake, tsunami and nuclear explosions.
"This intervention should stabilise the yen and increase
confidence that the Japanese economy will recover, and not cause
contagion in the rest of the world," said Julian Jessop, chief
international economist at Capital Economics.
There was little impact on the dollar index <.DXY>, the
focus for commodity markets mindful of a stronger dollar's
potential to weigh on oil prices.
"This is a yen story, not a dollar story," Jessop said. "It
is way down the list of things that are going to drive commodity
markets considering what is happening in Libya."
(Additional reporting by Alejandro Barbajosa; editing by
Barbara Lewis)
