Oil prices jumped to near two and a half year highs this evening after an airstrike near Libya's oil infrastructure kept the market braced for a prolonged disruption from the OPEC nation and worried unrest might spread to other regional producers.
Fresh airstrikes hit Brega, about 1.2 miles from a Libyan oil terminal, after embattled leader Muammar Gaddafi launched a land and air offensive to retake territory in Libya's east.
The reprisal sparked calls from rebels for foreign air strikes on African mercenaries they said were helping him stay in power.
Brent crude traded up $1.57 to $116.99 a barrel, off the session high of $117.81 this evening. Brent hit a two and a half year high near $120 a barrel on February 24 on the Libyan crisis.
US crude futures rose $2.05 to $101.68 a barrel after hitting $102.37. They rose above $103 on February 24.
The head of Libya's oil company, Shokri Ghanem, said the nation's problems could push prices over $130 a barrel if they persist. Libya's normal output of 1.6 million barrels per day had been cut to 700,000-750,000 bpd as most of the industry's foreign workers had taken flight after the crisis began, he said.
Governments in Yemen, Oman, Iran and Iraq have clashed with protestors seeking reforms as popular unrest has spread in the region holding 60% of the world's oil reserve.
Crude pared gains in the morning after the release of US oil inventory data from the US Energy Information Administration showed inventories at the Cushing, Oklahoma, delivery point for the New York Mercantile Exchange's oil futures contract hit a record high.
Brimming stocks at the hub have been partly responsible for the wide discount of US crude to Brent in recent weeks. Total US inventories of both crude and refined products fell, however, the EIA report showed.
