LONDON, July 29 Reuters Oil prices were stable on Monday as fears of a widening conflict in the Middle East after a rocket strike in the Israelioccupied Golan Heights balanced demand concerns to put a floor under last week39;s price losses.

Brent crude futures lost 33 cents, or 0.41, to 80.80 a barrel at 1214 GMT. U.S. West Texas Intermediate WTI crude futures fell by 29 cents, or 0.38, to 76.87.

The Brent and WTI benchmarks lost 1.8 and 3.7 respectively last week on sagging Chinese demand and hopes of a Gaza ceasefire agreement.

A rather muted opening greets oil prices after Middle East tension is back on the menu due to a reported Hezbollah attack, said PVM analyst John Evans, referring to the strike on Golan Heights.

On Sunday Israel39;s security cabinet authorised Prime Minister Benjamin Netanyahu39;s government to decide on the manner and timing of a response to the attack that killed 12 teenagers and children.

Israel vowed retaliation in Lebanon against Iranbacked Hezbollah, which denied responsibility for the attack. Israeli jets hit targets in southern Lebanon on Sunday.

The tensions have spread to several fronts and are in danger of spilling into a wider regional conflict, sparking investor concerns about the potential impact on crude output from the world39;s largest oilproducing region. But to date, output has not been affected.

Despite renewed geopolitical tensions in the Middle East, the lack of any supply disruptions limits any positive price…