* U.K., France, U.S. say Libya must comply with UN
resolution
* Gaddafi says to storm Benghazi, showing "no mercy, no
pity"
* Coming Up: Saudi King to issue decrees after Friday
prayers
(Updates prices)
By Alejandro Barbajosa
SINGAPORE, March 18 (Reuters) - Brent crude jumped by more
than $1 to stand above $116 on Friday on fears of rising
geopolitical tensions in the oil-rich Middle East and North
Africa, after the U.N. approved military action to curb Libyan
leader Muammar Gaddafi.
Front-month Brent rose $1.24 to $116.14 at 0438 GMT,
after earlier touching a high of $116.50, while U.S. crude
rose $1.60 to $103.02.
Last week's devastating earthquake in Japan, the world's
third-largest oil consumer, shattered confidence across world
markets and sent Brent to a three-week low near $107 two days
ago.
But prices have recovered since then and are now less than
$4 away from a 2-1/2-year high of almost $120 reached on Feb.
24, when an uprising against Gaddafi shut down at least
two-thirds of the country's oil output.
"The initial shock in the markets with regards to the
negative impact on growth as well as the short-term effect on
Japanese demand is now subsiding and people are turning to the
medium- and long-term implications of the earthquake on oil
demand and turmoil intensifying in the Middle East," said Yingxi
Yu, a Singapore-based commodities analyst with Barclays Capital.
The involvement of foreign forces "could prove to be a
further escalation of the situation in Libya. It seems difficult
that this will speed up the flow of Libyan oil back into the
world market," Yu added.
The United Nations authorised military strikes to curb
Libyan leader Gaddafi, hours after he threatened to storm the
rebel bastion of Benghazi overnight, showing "no mercy, no
pity".
Earlier this week, Bahraini forces cracked down on Shi'ite
protesters demanding reform by the Sunni monarchy, which drew
criticism from key Bahraini and Saudi ally the United States.
The involvement of Saudi Arabian troops and other forces
from Gulf Cooperation Council countries also raised the stakes
of confrontations in the island state, which lies less than 100
kilometers from the hub of the Saudi oil industry.
"Events over the past week suggest that something profound
has changed in the dynamics of the region," Yu said.
"The relation between the U.S. and Saudi Arabia has been the
key foundation of the oil market for many decades. Recent events
seem to be creating some stress on the relationship."
Saudi Arabia's King Abdullah will address the nation 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.
Saudi Arabia has mostly avoided the wide unrest that toppled
rulers in Egypt and Tunisia and spread to other Gulf countries,
but there are pockets of dissent in the absolute monarchy, which
has no elected parliament. Most demonstrations have been in the
east of the kingdom, where the world's largest oil reserves are
located.
(Editing by Himani Sarkar)
