LONDON, Jan 11 (Reuters) - A blast in Tehran highlighted concerns about disruption of oil supply from Iran, pushing Brent crude higher on Wednesday, outweighing worries about the effect on demand growth of Europe's debt crisis.
An Iranian nuclear scientist was killed by a bomb placed on his car in an attack Tehran's deputy governor blamed on Israel.
Oil investors worry that tensions between the West and the Islamic republic could escalate further after the bombing, which comes as the United States seeks to persuade China to help toughen sanctions against the exporter over its nuclear programme.
Brent rose 22 cents to $113.50 a barrel by 1007 GMT, up from an intraday low of $112.78. U.S. crude however was down 12 cents to $102.12 a barrel.
Better refining margins after struggling Swiss refiner Petroplus announced it would close three of its five refineries has also helped support crude prices, analysts said.
"Refining margins have improved, and this is feeding through to the crude market, while large volumes of Brent are moving to Asia as purchasers start to look for alternatives to Iranian crude," said James Zhang, analyst at Standard Bank.
Analysts said the market was eyeing a European Union (EU) meeting on Jan. 23 to decide on an oil embargo on Iran as it refuses to abandon its nuclear effort, which the United States and its allies believe is aimed at producing arms.
"I think the geopolitical risk factors will keep the market supported," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo. "We still have the Jan. 23 meeting coming up and the Nigerian unrest."
Protests in Nigeria that started out as nationwide opposition to the scrapping of a fuel subsidy have escalated into religious conflicts, threatening oil exports.
DEBT WORRIES
Worries over the finances of Greece, which is racing to conclude a deal and secure continued funding without which it will default in March, kept gains in check.
Fitch Ratings could also downgrade by one or two notches countries under review such as Italy or Spain, even though it doesn't expect to cut France's triple-A credit rating this year, an official of the agency said on Tuesday.
Higher crude inventories in the United States could have capped further gains in prices.
U.S. crude stockpiles were up 397,000 barrels in the week to Jan. 6, according to data from the industry group the American Petroleum Institute. A clearer picture on inventories will emerge with numbers from the U.S. Energy Information Agency later in the day.
A Reuters poll of 10 analysts forecast an 800,000-barrel rise in domestic oil inventories, with all but two analysts expecting a build in stocks.
Brent is neutral in a range of $111.80-$114.64 per barrel, but is biased to fall, while U.S. oil will fall to $101.16 per barrel, according to Reuters technical analyst Wang Tao. . (Additional reporting by Seng LiPeng in Singapore; Editing by Anthony Barker)
