* U.S. clears way for tighter sanctions against Iran
* Iran President increases rhetoric against Israel
* Coming up: U.S. consumer confidence index; 1400 GMT
(Updates prices)
By Peg Mackey
LONDON, Sept 25 (Reuters) - Oil rose to around $111 a barrel
on Tuesday as escalating tensions over Iran offset plentiful
supplies and concern over the health of the global economy.
Washington cleared the way on Monday for tighter sanctions
against Iran to curb its nuclear ambitions, while Tehran
increased its rhetoric against Israel, heightening concerns
about a potential conflict between the two.
Investors have been taking stock after a series of stimulus
measures from central banks in the United States, Europe and
Japan, and are coming to the view that the steps may not do much
to boost growth in the economy.
"The oil market remains caught between supply risks and the
prospect of fresh liquidity from the central banks on the one
hand, and plentiful supply and growing economic concerns on the
other," said a Commerzbank research note.
"Until it decides which direction to take, the oil price is
likely to continue to fluctuate with a sideways tendency that
will depend on which factors happen to be more in focus."
Brent futures were up $1.11 to $110.92 per barrel at
1123 GMT, after rising to a session high of $111.11. U.S. crude
was up 84 cents to $92.77 a barrel.
NEW SANCTIONS
The U.S. government officially linked Iran's state oil
company to the country's Islamic Revolutionary Guard Corps on
Monday, allowing Washington to apply new sanctions on foreign
banks dealing with the company.
The move could make Iran struggle to find ways to ship its
oil to consumer nations, especially in Asia, where buyers are
being deterred by a lack of European insurance cover.
The U.S. and European Union imposed sanctions on Iran
earlier this year to curb Tehran's nuclear ambitions, which the
Middle Eastern nation says aim at peaceful power generation.
Adding to worries, Iran's president on Monday ignored a
United Nations warning and increased rhetoric against Israel at
the U.N. General Assembly in New York.
DEMAND CONCERNS
A faltering global economy and its negative effect on demand
continues to weigh, especially after a survey on Monday showing
German business sentiment dropped for a fifth straight month.
Germany's relative resilience to the euro zone debt crisis
has been weakening as firms see falling demand for their
products from European partners and signs of a slowdown in other
markets.
The market is also waiting for U.S. inventory data for clues
on demand from the world's biggest consumer of oil. U.S. crude
oil stockpiles probably rose last week for the third straight
week, while gasoline and distillate stockpiles were also seen
higher, a preliminary Reuters poll showed on Monday.
The American Petroleum Institute will release its inventory
report later in the day, while the EIA will issue its data on
Wednesday.
