Oil rises over $1 on military conflict in Georgia

By Fayen Wong

PERTH (Reuters) - Crude oil topped $116 a barrel on Monday, rebounding from the previous session's decline on concern that fighting between Russia and Georgia could disrupt energy exports from the Caspian region.

U.S. light crude for September delivery was up 80 cents at $116 a barrel by 6:43 p.m. EDT, after rising as much as $1.19 earlier.

The contract had settled down $4.82 to $115.20 a barrel on Friday, before falling to $114.90 in post-settlement trade, the lowest level since early May.

London Brent crude rose 97 cents to $114.30.

"I think the military conflict in Georgia is the key factor in pushing up oil prices this morning. So much has happened so quickly since we first heard of Russia's attack last week," said David Moore, an analyst at the Commonwealth Bank of Australia in Sydney.

"I think there is also some degree of a technical rebound after oil's sharp fall on Friday."

The simmering conflict between Russia and its small, former Soviet neighbor Georgia erupted late on Thursday when Georgia sent forces into South Ossetia, a small pro-Russian province which threw off Georgian rule in the 1990s.

After a three-day battle in which Russia said 2,000 civilians were killed and thousands made homeless, Georgia offered Russia a ceasefire and peace talks on Sunday after pulling troops back from rebel South Ossetia's capital.

Oil prices were also supported by a pipeline blast in Turkey last week, which halted loadings of Azeri Light crude shipped to the Turkish port of Ceyhan.

A fire was still burning at the Baku-Tblisi-Ceyhan pipeline on Saturday and repairs may take one to two weeks or longer, sources at Turkey's state-owned pipeline company Botas said.

BP has cut output by at least 400,000 barrels a day at the Azeri-Chirag Gunashli oilfields because of the fire, traders said.

(Reporting by Fayen Wong)