* China raises reserve rate requirements
* Bahrain still tense
* Saudi King issues decrees after Friday prayers
(Updates prices, analyst comments, China reserve ratio)
By Nia Williams
LONDON, March 18 (Reuters) - Oil rose above $116 a barrel on
Friday after the United Nations authorised Western-led attacks
in OPEC member Libya and tension stayed high across the
oil-producing Middle East.
Efforts to subdue inflation in China, the world's second
biggest oil user after the United States, only briefly wiped out
gains.
Brent <LCOc1> was up $1.19 at $116.09 a barrel by 1202 GMT,
after earlier climbing above $117. U.S. crude for April <CLc1>
gained $1.67 to $103.09.
Oil markets reached their highest in just over a week after
the U.N. Security Council, meeting in emergency session on
Thursday, passed a resolution endorsing a no-fly zone to halt
government troops around 100 km (60 miles) from rebel stronghold
Benghazi.
The U.N. also authorised "all necessary measures" -- code
for military action -- to protect civilians against Gaddafi's
forces. []
Libya pumped 1.6 million barrels per day (bpd) before
conflict broke out earlier this year.
Traders were trying to assess how long supplies might be
disrupted and whether there could be even more serious supply
outages in the Middle East.
"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 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.
Sunni-ruled ally Saudi Arabia, OPEC's largest oil producer,
has sent troops into Bahrain, together with other forces from
the Gulf Cooperation Council (GCC).
As it monitors unrest in its oil-producing east, home to its
Shi'ite minority, Saudi Arabia on Friday announced a series of
measures. []
CHINA
Brent briefly turned negative after the People's Bank of
China increased the required reserve ratio for the country's
biggest banks by 50 basis points to a record 20 percent as part
of the government's campaign to dampen inflation.
[]
Although it could limit fuel demand, analysts predicted the
impact on crude markets would be limited, compared with metals
whose market direction is more dependent on Chinese consumption.
"While credit rationing and higher interest rates do appear
to have a noteworthy effect, these are relatively minor when
compared to their impact on other commodities, especially the
base metals," said James Zhang, commodity strategist at Standard
Bank.
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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
Breakingviews-Crude bullied by black swans []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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
in volatile trade.
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 had 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 Saudis are making up a good portion of Libya's losses,
Japanese demand is off sharply and will likely remain down over
the near term, while the Libyan pendulum could now potentially
swing back in favor of the rebels, increasing the odds that oil
production could get back on track should the Libyan leader
fall," he said.
(Additional reporting by Alejandro Barbajosa; editing by
Barbara Lewis)
