By Manash Goswami
SINGAPORE (Reuters) - Brent futures held above $106 a barrel on Tuesday as immediate supply worries from prolonged outages in Africa offset the impact of a deal aimed at ending a decade-long dispute over Iran's nuclear programme.
While chances of a potential conflict diminished after Iran halted its most sensitive nuclear operations under a preliminary deal, the prospects of the OPEC member pumping more supplies still remains far away. That kept investors focused on near-term supply worries stemming from unrest in Iraq and Africa.
Brent crude rose 22 cents to $106.57 a barrel by 0724 GMT, after dropping to a low of $105.81 in the previous session. U.S. oil futures slipped 23 cents to $94.14. There was no settlement on the New York Mercantile Exchange due to the Martin Luther King Jr. Day holiday.
"Short-term supply related issues will continue to prop up oil prices," said Victor Shum, vice-president of energy consultancy IHS Energy Insight. "The Iran situation appears to be making progress and that is taking some of the geopolitical tension off, but lifting oil sanctions will be the last to happen."
The United States followed through on promised sanctions relief as part of a nuclear agreement that began taking effect on Monday, in exchange for steps that Tehran had taken.
Since Iran had fulfilled its initial nuclear commitments under the deal, the United States will allow the six current customers of Iranian oil to maintain their purchases at current reduced levels for the six-month duration of an interim nuclear deal between Iran and world powers.
A U.S. official said Iran was currently exporting about 60 percent less oil than it was two years ago and would be held to those reduced levels.
"The return of Iran to global oil markets received a boost with Iran's atomic energy chief conducting a televised interview confirming the voluntary reduction of uranium enrichment at two of its key nuclear facilities, in line with the recent agreement," analysts at ANZ said in a note to clients.
STEMMING LOSSES
Yet further declines in oil were capped by worries of prolonged disruptions from South Sudan and OPEC member Libya.
South Sudan's president said his soldiers had seized the regional capital Malakal back from rebels, a report dismissed by insurgents battling the government.
Libya plans to remove protesters who have seized eastern ports vital for lucrative oil exports within the next few days, Prime Minister Ali Zeidan said.
Since the summer, a group of heavily armed demonstrators has occupied three eastern oil ports which together accounted for 600,000 barrels per day of exports, to force the Tripoli government to give it political autonomy.
"While Libya seems to be making progress in raising exports, there are concerns out there of protests returning and hurting oil output," said Shum. "You have South Sudan in conflict and growing unrest in Iraq."
(Editing by Richard Pullin and Chris Gallagher)
