Bulls are back in charge of oil markets as they were during the Libyan war in 2011 as fears of an Israeli strike on Iran and a loss of Iranian oil supplies eclipse a collapse in oil demand in debt-laden Western economies.

Brent oil prices will average $110.3 a barrel this year, according to a fresh Reuters monthly oil poll, up from January's estimate of $107.30.

A change of $3 is big in a poll of over 30 analysts, and last happened at the peak of the Libyan war in May.

The West's determination to prevent Iran acquiring nuclear weapons is coming at a price - a price that might include a second global recession triggered by an oil shock, David Hufton from oil brokerage PVM said.

Oil rose to a 10-month high above $125 a barrel on Friday in dollar terms, though oil prices remain some $20 a barrel short of their 2008 record of $147. But in euro terms, Brent crude rose to an all-time high of 93.60 euros last week, topping its 2008 record.

So far this year, Brent prices have rallied by more than 15 percent, pushed up by fears over Iran and a loss of production from small and mid-sized producers Syria, Yemen and South Sudan.

Data published last week showed unexpectedly weak activity in Europe's most powerful economy Germany, and in France, sparking fresh worries that the region could tip into recession.

In the United States, demand for refined oil products is close to its lowest level in nearly 15 years, indicating that motorists are driving less.

The price spike is going to be a challenge for politicians in the West running for re-election, said Olivier Jakob from consultancy Petromatrix.

(Polling by Nallur Sethuraman and Soma Das in Bangalore; Editing by Jason Neely)