RTRS:UPDATE 4-Oil rises above $110 on Ukraine, Libya supply worries
* Pro-Russian rebels hold 7 European monitors hostage
* U.S. to expand sanctions on Russia over Ukraine
* Zueitina port still closed as Libyan govt assesses damage
* Brent-WTI gap narrows but still near $9/barrel (Updates detail, comment; paragraphs 1, 3-4, 6)
By Christopher Johnson
LONDON, April 28 (Reuters) - Brent crude oil rose above $110 a barrel on Monday, close to a seven-week high, as tensions mounted in eastern Ukraine and Libya delayed the reopening of a damaged eastern port.
The United States and Europe are preparing new sanctions against Russia over its actions in Ukraine. Pro-Russian rebels paraded European monitors they are holding on Sunday, freeing one but saying they had no plans to release another seven.
June Brent was at $110.08 a barrel, up 50 cents, by 0835 GMT after settling down 75 cents on Friday.
U.S. crude for June delivery added 80 cents to $101.40 a barrel, reversing some of its losses from Friday, when it hit the lowest since April 7.
Western sanctions are likely to steer clear of energy as Europe depends heavily on Russia for oil and gas. But Moscow has indicated a willingness to use gas supplies to pressure Ukraine, raising fears that oil flows could also be affected.
"The Brent price is likely to find continued support from the uncertainty over the way the situation will play out in east Ukraine and from the possibility of delivery outages," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
Russia's oil pipeline monopoly Transneft has said it is worried Ukraine may take control of its oil product pipeline to Hungary.
"Russia has shaken up the global energy scene by showing its willingness to employ energy as a political weapon," said David Hufton, managing director of London-based brokerage PVM Oil Associates.
"The world's largest energy supplier and exporter has reminded customers that it is not a reliable source of supply."
In Libya, the government is assessing damage at the eastern oil port of Zueitina following an eight-month oil blockade. Zueitina is one of two ports due to reopen after the government struck a deal with rebels three weeks ago.
U.S. crude narrowed the gap with Brent CL-LCO1=R to around $8.50 a barrel after it stretched as wide as $9.28 on Friday.
Analysts blamed record crude inventories in the United States for depressing U.S. crude prices despite a rise in refinery utilisation rates. (Additional reporting by Florence Tan in Singapore; Editing by Dale Hudson)
