UPDATE 3-Oil prices rise above $105, focus turns to Middle East
* U.S. decision to arm Syrian rebels could cause escalation
* Brent bounces more than $3 a barrel from week's low
* Dollar remains weak, hits four-month low
(Changes dateline, updates throughout)
LONDON, June 14 (Reuters) - Brent oil futures rebounded above $105 a barrel on concern over the war in Syria and continuing weakness for the dollar.
Though Syria is not key to global oil supply, investors are worried that escalation in the civil war could drag in other countries and plunge the whole oil-producing region into conflict.
"Crude oil has been trading in a range for more than a month ... With the escalation in Syria, the buying on the dips is probably going to be stronger as the geopolitical premium needs to be increased," Petromatrix analyst Olivier Jakob said.
Brent crude was up 32 cents at $105.27 a barrel at 1000 GMT on Friday, on track to end the week marginally higher. The contract has rebounded from a weekly low of $101.82 on Tuesday, partly driven by a weaker dollar.
U.S. oil was 27 cents higher at $96.95 a barrel, trading at the highest level in nearly a month, and was also set to rise slightly on the week.
President Barack Obama authorised the shipment of U.S. weapons to Syrian rebels for the first time after the White House said it had proof that the Syrian government used chemical weapons against rebels.
"We're seeing the Syrian situation worsen ... all the foreign backers are upping their stakes in Syria and none of them can really be sure what the consequences will be," Richard Mallinson, a consultant at Energy Aspects, said.
In other geopolitical news, millions of Iranians voted to choose between six candidates to replace incumbent president Mahmoud Ahmadinejad, but none is seen as challenging the Islamic Republic's 34-year-old system of clerical rule.
Analysts say the outcome is unlikely to have any short-term impact on oil because any improvement in relations with the West over Iran's nuclear programme will take time to translate into a change in policy.
"Sanctions on oil are probably going to be among the last (issue) to be addressed, because they are the biggest lever the West has," Mallinson said.
Oil has risen this week in spite of forecasts of "sluggish" demand growth by industry bodies such as the International Energy Agency.
"The key driver of oil has been the weakness in the dollar rather than any fundamental factors," said Ric Spooner, chief market analyst at CMC Markets.
The dollar remained in the doldrums on Friday after hitting a four-month low against a basket of currencies in early trade.
A weaker dollar supports oil by making it cheaper for holders of other currencies.
(Additional reporting by Manash Goswami; Editing by Clarence Fernandez and David Goodman)