LONDON, Dec 27 (Reuters) - Oil prices edged up on Tuesday, supported by fears of supply disruptions and Iranian naval exercises in a crucial oil shipping route, with gains capped by simmering euro zone debt concerns.
Brent crude rose by 35 cents to $108.31 per barrel by 1115 GMT and U.S. crude was also up 28 cents to $99.96 a barrel, having previously traded slightly above $100.
"The year 2011 may be remembered in the annals of oil market history as the year of the supply shock," analysts from JBC Energy led by David Wech said in a note.
"While the quicker-than-expected return of Libyan production has contributed to a general view that supply in 2012 will be ample, we would argue that this need not be the case".
"The strong uptick in sectarian violence across Iraq is a serious cause for concern, as it could set back Iraqi production targets by years... Iran also presents a major wild card," JBC said
Iran on Saturday began 10 days of naval exercises in the Strait of Hormuz, raising concern about a possible closure of the world's most strategic oil transit channel in the event of any outbreak of military conflict between Tehran and the West.
At least seven people were killed when a suicide car bomber hit Iraq's interior ministry on Monday in the latest attack since a crisis erupted between the Shi'ite-led government and Sunni leaders a week ago.
Syria on Saturday its oil production had fallen by a third due to international sanctions imposed over its nine-month crackdown on anti-government protests.
Worries about supply disruptions were offset by concerns that Europe's debt crisis might have broad consequences on oil demand going far beyond just crippling consumption in Europe.
Leaders of Germany's major business and industry groups said they expect the country's economy to lose momentum although there will be no recession in 2012.
Industrial output at top energy consumer China was also expected to slow slightly, growing 11 percent in 2012, easing from an estimated 13.9 percent in 2011, China's industry minister said on Monday.
"On the macro side there are no great changes: the Italian 10 year bond yields are still very close to 7 percent and we still have to wait for S&P to announce which European countries it downgrades and if France is one of those," said Olivier Jakob from Petromatrix consultancy.
Positive data came from the United States where new single-family home sales rose to a seven-month high in November and the months' supply of houses on the market was the lowest in 5-1/2 years, adding to signs of a recovery in the sector.
Investors will be looking for more positive signs from U.S. data this week, including the S&P Case-Shiller house price index for October and U.S. consumer confidence for December. (Reporting by Dmitry Zhdannikov; Editing by William Hardy)
