Brent slips, stays above $ 125 on supply concerns

SINGAPORE (Reuters) - Brent slightly lower on Monday and snapped five days of gains, but remained near 10-month highs of over $ 125 because of concerns about supply disruptions as tensions rose on the Iran's controversial nuclear program.

Brent increased by 13 percent in February following an increase of more than 3 percent the previous month pulled down Asian stocks, base metals and gold that the markets are worried about rising prices crude can affect the global economy. The oil may also have slipped as investors made a profit after the recent outbreak.

Brent fell 7 cents to 125.40 dollars per barrel in 0233 GMT, after settling at its highest since April 29. U.S. crude fell 24 cents to $ 109.51, after rising for a seventh straight session and ending at the highest level since May 3

"Iran is the basis of soaring oil prices," said Ben Le Brun, a Sydney-based analyst at OptionsXpress markets. "There seems to be some profit taking going on today, but prices are set to further increase the pressure on Iran does not seem they will calm down soon."

Brown expects the oil to increase by about 5 to 10 percent from current levels because of fears of a supply disruption from the Middle East.

Iran has sharply stepped up its efforts controversial uranium enrichment, the UN nuclear agency said Friday. The increase in labor can have both civilian and military stressed that Tehran has no intention of backing down in a long-standing dispute with the West which has raised fears of war.

Fears of supply disruption

The UN report heightened fears of a supply disruption and could stir up trouble in Israel, which has threatened Iran with preemptive strikes on nuclear sites. That would send shockwaves throughout the region and drive oil even higher.

Western powers are increasingly at loggerheads with Iran over its efforts to generate nuclear energy. Iran insists it wants to develop atomic energy for peaceful purposes but the West suspects it is trying to acquire nuclear weapons.

In the context of growing concerns about oil supply, Treasury Secretary Timothy Geithner said the Obama administration was weighing the circumstances that might justify the exploitation of the nation's strategic reserves of oil.

Geithner's comments may have prompted investors to book profits, Le Brun said.

"It takes a lot of pressure on prices," Le Brun said. "It is definitely the U.S. interest to do so. Oil at this level is very damaging to the U.S. and global economy."

The International Monetary Fund has already reported higher oil prices as a growing threat to the global economy.

Hedge funds and other large investors raised their paris on rising oil prices last week at the highest level since May, data from the regulatory agency of the United States showed Friday, as tensions the Middle East drove prices to nine-month peaks.

Speculators increased their net long position on the New York Mercantile Exchange by 25.273 to 259,162 contracts, the U.S. Commodity Futures Trading Commission said.