Brent crude futures have climbed above $110 a barrel as turmoil in Libya fuelled fears that unrest could spread to other oil-producing nations and choke supplies.
ICE Brent April crude futures were $4.46 to $110.22 a barrel by 1454 GMT, after reaching an intraday high of $110.26 a barrel, trading at levels not seen since early September 2008.
US light crude futures were $2.48 stronger at $97.90 a barrel, the strongest price since early October 2008.
Between 300,000-400,000 barrels per day (bpd) of Libyan output has been shut down, marking the first cut in oil supplies related to the recent wave of protests in North Africa and the Middle East.
"If we lose Libyan production, then you will have to replace around 1.6 million barrels per day of very good quality crude, which would introduce logistical implications and have a cost," Credit Agricole CIB analyst Christophe Barret said.
Austria's OMV said it might be heading for a full production shutdown amid the violence in Libya, which pumps 1.6 million barrels per day (bpd) or nearly 2 per cent of global supply
The comments echo remarks by Total, Repsol, Eni and BASF that they were either slowing or stopping output.
Barclays analyst Amrita Sen said in a note around 1 million bpd of Libyan crude oil output is likely to have been shut in.
Should the unrest bring production to a halt in both Libya and Algeria, Nomura analysts said oil prices could peak at $220 a barrel.
Governments across the world moved to send planes and ships to evacuate citizens from Libya, whose leader Muammar Gaddafi has vowed to crush the revolt.
Focus was also on top exporter Saudi Arabia, where ruling King Abdullah unveiled a package of benefits worth billions of riyals to mark his return on Wednesday after months of medical treatment abroad.
Jittery investors are worried about further supply disruption if protests spread in the country, which supplies around 10 per cent of the world's oil and holds most of the world's spare capacity. On Tuesday, Saudi stopped short of pumping more oil to calm markets, saying prices were driven by fear.
The International Energy Agency's (IEA) executive director Nobuo Tanaka said prices above $100 per barrel for the rest of the year could drag the global economy back into a repeat of the 2008 economic crisis.
Analysts said US light crude futures, also known as West Texas Intermediate (WTI) remained well supported following the roll of the contract, but noted that a potential build-up of weekly U.S. crude oil stockpile data due later could pressure prices.
"The fact that WTI has risen further is mainly related to the contractual rollover, as the new front month contract was $2 higher than the expiring contract," Commerzbank analyst Carsten Fritsch said.
Reuters
