Oil prices rose by over $2 a barrel as a wave of UN-mandated airstrikes on Libya and proliferating unrest in the Middle East fanned concerns about oil supply from the region.
Brent crude for May was up $1.80 to $115.73 a barrel this afternoon after earlier trading over $116, while US crude for April gained $1.81 at $102.88 a barrel.
Unrest flared in even the most authoritarian regimes in the Middle East over the weekend.
In Syria, crowds set fire to ruling Baath Party headquarters, its main courts complex and phone company branches in an uprising that has resulted in at least four deaths over the past week.
In Yemen, the killing of dozens of anti-government demonstrators prompted the country's ambassador to the United Nations to resign in protest on Sunday.
A powerful Yemeni general expressed support for protesters demanding that the veteran head of state step down, referring to recent resignations of political and military figures but stopped short of announcing his own resignation.
Tension also increased between Bahrain and Iran as tit-for-tat diplomatic expulsions followed Tehran's anger at last week's crackdown on Shi'ites.
Bahrain's king announced a foreign plot had been foiled and thanked fellow Sunni-ruled neighbours, notably Saudi Arabia, for their support.
Saudi Arabia, a US ally, has not seen the kind of mass uprisings that have rocked the Arab world this year, but dissent has built up as unrest has taken root in neighbouring Yemen, Bahrain and Oman.
Dozens of Saudi men gathered outside the Interior Ministry in the capital Riyadh on Sunday to demand the release of jailed relatives amid a heavy police presence.
Saudis have been warned protests will not be tolerated because they violate the Koran's teachings.
Libyan rebels encouraged foreign air strikes to continue, saying they aimed to capture Tripoli.
Gaddafi's control of oil infrastructure in the long term could mean deals with foreign oil companies are reshaped in favour of countries not participating in the attacks.
Libya is considering offering oil block contracts directly to China, India and other nations it sees as friends, Libya's top oil official said on Saturday, instead of an open bidding processes.
China, India, Russia, Brazil and Germany were the five nations that abstained in last week's UN vote to authorise the use of force against Gaddafi. The other 10 members of the Security Council voted in favour.
Russian Prime Minister Vladimir Putin criticised the decision, likening the resolution to a medieval call for crusades.
Western air strikes in Libya are likely to last 'a while yet', but it is up to Libyans and not the international community to decide what course the country takes, a top adviser to the French president said.
