* Brent falls below $121.50 a barrel
* Crude also falls on weak demand outlook
* But ongoing tension could reverse losses
By Seng Li Peng
SINGAPORE, April 19 (Reuters) - Brent crude slipped as
concerns grew that high oil prices could hamper demand and curb
economic growth, while U.S. crude futures were also hit after
credit rating agency S&P lowered the country's outlook to
negative.
But analysts said the widespread ongoing Middle East tension
could still reverse losses and lift prices.
ICE Brent crude <LCOc1> for June fell 32 cents to $121.29 a
barrel by 0315 GMT. U.S. crude <CLc1> was down 40 cents at
$106.72 a barrel.
"We are not driven completely by fundamentals. What's
driving things is more the economic news and the political news
in the Middle East," said John Vautrain of consulting firm
Purvin & Gertz.
"The tension does not seem to be getting any better, and
we've now got some growing tension between Iran and Saudi
Arabia. Brent still could go up in the next week or two."
A Saudi minister urged Iran on Monday to protect its
diplomats in the Islamic republic and threatened unspecified
measures if it failed to do so. []
Iranian students demonstrated outside the Saudi embassy in
Tehran last Monday, protesting against the Gulf Arab state's
role in Bahrain, media reports said.
In Libya, NATO bombing has damaged Gaddafi's armour but was
not enough to break the stalemate, and the alliance may have no
choice but to use naval gunfire or helicopters, analysts said --
the latter vulnerable to ground fire by Gaddafi's troops.
[]
YEMEN PROTESTS IN THIRD MONTH
The protests in Yemen, inspired by uprisings that toppled
the leaders of Egypt and Tunisia, are now in their third month
and bring tens of thousands of people onto the streets almost
every day demanding an end to endemic poverty and corruption.
Scores of protesters have been killed. []
Bahrain is also struggling with its tension. The mostly
Shi'ite protesters in the outpouring of unrest in February and
March demanded more freedom, an end to discrimination and a
constitutional monarchy in Bahrain. []
In Syria, thousands demanded the overthrow of President
Bashar al-Assad on Monday at the funerals of 17 protesters
killed in the city of Homs as pro-democracy protests intensified
despite a promise to lift emergency law. []
* HIGH OIL PRICES SPARK CONCERNS
But the high oil prices were starting to weigh on economic
growth and hit demand.
Nobuo Tanaka, executive director of the International
Energy Agency, on Monday reiterated comments that if oil prices
remained around current levels, they could trigger a recession
similar to that begun in 2008, when oil prices hit a record
of nearly $150 a barrel before collapsing to less than $40.
"Already we are seeing some indication of the slowdown in
demand, and it's alarming," Tanaka told Reuters. []
Saudi Oil Minister Ali al-Naimi said economic recovery was
still weak in some countries, and added that the market
was "oversupplied".
"The recovery remains patchy; in many countries
unemployment remains at unacceptable levels," Naimi told a
meeting of Middle Eastern and Asian energy officials in
Kuwait.
Saudi Arabia, a leading member of OPEC, had confirmed on
Sunday that the kingdom had cut output by more than 800,000
barrels per day (bpd) in March because of weak demand and
oversupply. []
In the United States, S&P on Monday maintained the U.S.'s
top AAA credit rating, but authorities had not made clear how
they would long-term fiscal pressures. It said there was a risk
policymakers may not reach agreement on a plan to slash the huge
federal budget deficit. []
(Reporting by Seng Li Peng;Editing by Clarence Fernandez)
