Brent rises towards $109 on renewed Ukraine tensions

By Peg Mackey

LONDON (Reuters) - Brent crude oil climbed towards $109 per barrel on Monday as the deepening crisis between Russia and Ukraine unsettled investors.

Though the likelihood is remote that the turmoil could lead to an energy supply disruption, Saudi Oil Minister Ali al-Naimi said the world's top oil exporter was willing to supply more crude in the event of a shortage.

Pro-Moscow rebels claimed a resounding victory in Sunday's referendum in eastern Ukraine, with some saying that meant independence and others eventual union with Russia, as clashes broke out between separatists and troops.

Brent crude was up 80 cents at $108.69 by 1108 GMT, while U.S. crude gained 49 cents to $100.48.

The European Union, which called Sunday's polling illegal, could tighten the sanctions it placed on Russia after Moscow annexed Ukraine's Crimea region following a similar vote in March. But analysts say tougher action is unlikely to impact supply.

"The EU might come up with more sanctions against Russia, but in terms of supply and demand - that is not going to change anything," Olivier Jakob of Petromatrix in Zug said.

Foreign ministers from the 28-nation bloc are due to meet on Monday to decide whether to add about 15 people and several Crimean-based companies to its list of 48 Russians and Ukrainians already targeted with asset freezes and visa bans.

Investors are also keeping an eye on industrial production and retail sales data expected from China on Tuesday.

Negotiators from Iran and the International Atomic Energy Agency will meet in Vienna on Monday, a day before talks resume between Tehran and six western nations over Iran's nuclear programme.

The two sets of talks are separate but closely linked as both focus on fears that Iran may be covertly seeking the capability to develop nuclear weapons.

Any sign of progress towards a final resolution to the West's dispute with Tehran would pressure oil prices in anticipation of a ramp-up in Iranian oil exports.

(Additional reporting by Keith Wallis in Singapore; editing by Keiron Henderson and Jane Baird)