Brent crude rose over $119 a barrel and U.S. crude hit a 2-1/2-year high on Monday at more than $108 as unrest in the Middle East and North Africa triggered concern that supplies could be dented while economic growth bolsters demand.
Comments from Iran's oil minister that there was no need for OPEC to hold an extraordinary meeting to address high oil prices also supported sentiment.
Iran is OPEC's leading oil price hawk and holder of the organization's rotating presidency in 2011.
ICE Brent gained 39 cents to $119.09 a barrel at 0551 GMT (1:51 a.m. ET), after trading as high as $119.48, near the 2-1/2-year peak of $119.79 hit on February 24.
U.S. crude was up 42 cents to $108.36 a barrel at 0551 GMT, after touching $108.74 earlier in the session -- highest since September 2008.
We have supply concerns which we haven't had for the last few years and this is mostly related to Libya now, said John Vautrain of energy consulting firm Purvin and Gertz.
The tension has disrupted crude supplies, and that is affecting Europe.
The government of Libya -- the world's 17th-largest oil producer and Africa's third-largest -- sent an envoy to Greece on Sunday to discuss an end to fighting, but gave no signs of any major climbdown in a war that has ground to a stalemate between rebels and forces loyal to Muammar Gaddafi.
Underlining the plight of civilians in western Libya, a Turkish ship that sailed into the besieged city of Misrata to rescue some 250 wounded had to leave in a hurry after crowds pressed forward on the dockside hoping to escape.
In Yemen, two protesters died and hundreds were hurt on Sunday when police used live rounds, tear gas and batons to try to break up protests against President Ali Abdullah Saleh, who called for an end to weeks of unrest, signaling he has no intention of resigning soon.
Unrest also reigned in other parts of the Middle East, with the Gulf Arab states voicing deep concern over what they called Iranian interference in their affairs after Iran objected to the dispatch of Saudi troops to Bahrain and a spying row raised tensions.
Bahrain has seen the worst unrest since the 1990s after mostly Shi'ite protesters took to the streets in February, inspired by uprisings that toppled leaders in Egypt and Tunisia, to demand a bigger say in the Sunni-ruled country.
Upcoming elections in OPEC member Nigeria are also coming into focus.
STRONG DEMAND GROWTH
Oil prices also got a boost from Friday's strong U.S. payrolls data. U.S. employment grew firmly for a second straight month in March and the jobless rate hit a two-year low of 8.8 percent, confirming the labor market was strengthening and fueling optimism about oil demand.
We have a bigger story on demand side. There is strong demand growth this year, and that is a reflection of the economic prospects of the world, added Vautrain.
On top of that, we have the unusual circumstances of the Japanese power outage which had taken out all the nuclear plants. That will tend to put more load on oil fired generators going forward.
Japan's government on Monday told the operator of the crippled Fukushima nuclear plant to move quickly to stop radiation seeping into the ocean as desperate engineers resorted to bath salts to help trace a leak from one reactor.
Vautrain noted that while the oil-fired generators in Japan were out too after the March 11 earthquake and tsunami, there were prospects of more being restored over time.
That would probably put up the (crude) price more later.
(Editing by Ed Lane)