London Brent oil prices climbed back towards US$108 per barrel on Wednesday, propelled once again by heightened concerns about unrest in Libya and fears of spreading turmoil in the Middle East.
Brent North Sea crude for delivery in April rallied $1.73 to $107.51 per barrel in midday London trade, one day after rocketing to $108.57 -- which was the highest level since early September 2008.
New York's light sweet crude for April delivery increased by 68 cents to $96.10 a barrel. There is a big difference between Brent and New York oil prices due to oversupply in the United States.
Crude oil prices remain on an upwards trajectory due to ongoing unrest in the Arab world, with the leader of major crude exporter Libya warning he would stamp out anti-government protesters.
"This morning, crude oil prices continued their upside rally following ongoing growing concerns across the Middle East and North Africa (MENA)," said analyst Myrto Sokou at the Sucden brokerage in London.
She added: "Prices rallied on Tuesday and hit a two-and-a-half year high, as political unrest in Libya raised serious concerns about a potential oil supply disruption."
The unrest in the key oil-producing MENA region which includes Libya, Bahrain, Yemen and Iran -- all of which have seen uprisings -- has stoked fears of disruption to supplies, analysts said.
Commerzbank analyst Carsten Fritsch added that Brent was boosted by the tensions due to "its tighter availability and its geographical proximity to the unrest in Libya".
"There is no shortage of supply on the oil market at present, though, and it is actually the fear of this which is triggering the rise in price," Fritsch added.
At the same time, traders remain fearful that the Middle East unrest could spread to Saudi Arabia, OPEC's largest crude producer that pumps around 8.4 million barrels of oil per day.
"The big issue is still whether the uprising will gain foothold in Iran or spread to Saudi Arabia, which looks unlikely at the moment," said SEB analyst Filip Petersson. "However, the risk in the oil price remains skewed to the upside."