UPDATE 13-Oil rises on Libya conflict, Mideast unrest

                                
 * Air attacks on Gaddafi forces in Libya keep oil lifted
                                
 * Japan reactor, economic uncertainty help limit oil gain
                                
 * Coming up: API oil inventory data on Tuesday
 (Updates prices and market activity)
                                
 By Robert Gibbons
                                
 NEW YORK, March 21 (Reuters) - Oil prices rose more than 1
percent on Monday as U.N.-mandated airstrikes on Libya and
spreading protests and unrest in the Middle East reinforced
concerns about potential threats to oil supply from the
region.
                                
 Unrest flared again in the Middle East over the weekend,
including in authoritarian Syria. In Saudi Arabia's neighbor
Yemen, a powerful general expressed support for protesters
calling for an end to the president's 32-year rule.
[ID:nLDE72K1Q1] [ID:nLDE72K159]
                                
 Tension also increased between Bahrain and Iran as
tit-for-tat diplomatic expulsions followed Tehran's anger at
last week's crackdown on Shi'ites and Bahrain's king on Monday
announced a foreign plot had been foiled. [ID:nLDE72K032]
                                
 Concerns about oil demand in Japan's quake-hit economy were
revived by reports of smoke coming out of one of the hobbled
nuclear reactors and helped pull oil prices back from early
peaks, brokers and analysts said.
                                
 "Oil prices are still significantly higher ... Concern
isn't going to go away any time soon and little pullbacks are
inevitable," said Michael Hewson, a market analyst at CMC
Markets.
                                
 Brent crude futures for May delivery <LCOc1> rose $1.45 to
$115.38 a barrel by 12:28 p.m. EDT (1628 GMT), off an earlier
$116.22 peak.
                                
 U.S. crude futures for April delivery <CLc1> rose $1.33 to
$102.40 a barrel, off its high of $103.35. The April contract
expires on Tuesday.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
  More on Middle East unrest:       [nTOPMEAST]  [nLDE71O2CH]
  US military leads on Libya but for how long?   [nN19235888]
  Libya graphics               http://link.reuters.com/neg68r
  Map of Benghazi              http://link.reuters.com/gyv58r
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 Brokers also noted that both front-month Brent and U.S.
crude met resistance ahead of their respective Friday intraday
peaks of $117.29 and $103.66, hit before the "cease-fire"
declaration by Gaddafi's government in Libya pulled prices from
their intraday highs.
                                
 U.S. gasoline <RBc1> and heating oil <HOc1> futures also
pushed higher on Monday, partially on lift from stronger crude
oil prices and with gasoline benefiting from the end of winter
heating season and hopes for better driving demand ahead.
                                
 "Gasoline is following crude and there its seasonality, as
we come out of heating oil season and approach driving demand
season," said Robert Yawger, senior vice president for energy
futures at MF Global in New York.
                                
 Early views from analysts indicate expectations that weekly
inventory reports will show U.S. refined products stockpiles
fell last week.
                                
 LIBYAN UNCERTAINTY
                                
 Criticism of the Western air attacks on Libya came from
Russia and China, who along with India, Brazil and Germany
abstained from the U.N. Security Council vote last week
authorizing the use of force against Gaddafi.
                                
 If Gaddafi retains control of oil infrastructure it could
mean deals with foreign oil companies are reshaped in favor of
countries not participating in the attacks.
                                
 Libya is considering offering oil block contracts directly
to China, India and other nations it sees as friends, Libya's
top oil official said on Saturday, instead of an open bidding
process. [ID:nLDE72I0BX]
                                
 Libya's oil output has fallen to less than a quarter of the
1.6 million barrels per day (bpd) produced prior to the
rebellion against the Gaddafi rule, virtually paralyzing
shipments from what was the world's 12th-largest crude
exporter.
                                
 SAUDI ARABIA EYED
                                
 Saudi Arabia has not experienced the kind of mass uprisings
that have rocked other parts of the Arab world this year, but
dissent has surfaced as unrest has taken root in neighboring
Yemen, Bahrain and Oman.
                                
 Dozens of Saudi men gathered outside the Interior Ministry
in the capital Riyadh on Sunday to demand the release of jailed
relatives amid a heavy police presence. [ID:nLDE72J042]
                                
 JAPAN'S NUCLEAR WOES
                                
 Headlines from Japan's troubled nuclear complex revived
worries about the country's economy as unexplained smoke from
two reactors indicated the crisis was not over. 
[ID:nLDE72K1UB]
                                
 "Concerns about demand in Japan were raised when smoke
started coming from one of the reactors, pulling crude off the
early highs. It's negative psychology for the market," said
Phil Flynn, analyst at PFGBest Research in Chicago.
 (Additional reporting by Jessica Donati in London and
Alejandro Barbajosa in Singapore; editing by Jim Marshall and
Lisa Shumaker)