Oil Price Spikes to 2.5 Year-High on Libya Unrest
World oil prices shot higher Monday, striking 2.5 year highs on the turmoil in Libya and the Middle East, analysts said.
New York's main contract, light sweet crude for delivery in April, hit $106.45 a barrel -- the highest level since September 2008.
It later stood at $106.10, up $1.68 compared with Friday's close.
In London, Brent North Sea crude for April climbed $1.02 to $116.99.
"Oil prices continue to be on the uptrend primarily due to the deepening conflict in Libya and concerns about the protests spreading to other parts of the Middle East's oil-producing region," said Victor Shum at international energy consultants Purvin and Gertz.
"Concerns over oil supply disruptions in the Middle East and North Africa continue to drive oil prices," the Singapore-based energy expert told Agence France Presse.
Heavy fighting continued in Libya as forces loyal to leader Moammer Gadhafi battled rebels for control of the country's key cities and oil ports.
Libya is the fourth biggest oil exporter in Africa after Nigeria, Algeria and Angola, producing around 1.8 million barrels a day, with reserves of 42 billion barrels.
The bulk of its oil production is exported to Europe, according to the International Energy Agency.
"The unrest in Libya has pushed the price of oil up to a 2.5-year high," Commerzbank analysts said in a research note on Monday.
"We believe a swift return to 'normality' is unlikely and have therefore raised our oil price forecast for the second quarter to $120 a barrel. Only when the supply risks ease should the price of oil drop below the $100 a barrel mark again."
The White House on Sunday said it had not ruled out tapping U.S. strategic oil reserves to counter the sharp rise in crude prices.
"Well, we're looking at the options. The issue of the reserves is one we're considering," White House chief of staff William Daley told NBC.
"There's a bunch of factors that have to be looked at and it is just not the price" but also uncertainty stemming from unrest in the oil-rich Middle East and North Africa, he stressed.
Daley said President Barack Obama was "extremely concerned" about the rising price of oil and its impact on the struggling U.S. economy.