Crude oil rose on Friday, with Brent above $116 a barrel, as Libyan security forces began a violent crackdown on protesters in Tripoli and clashed with rebels near a major oil terminal.
By 1314 GMT (8:14 a.m. EST), Brent crude futures for April delivery were up $1.27 cents to $116.06 a barrel, after earlier touching $116.30. U.S. crude futures for April rose $1.17 cents to $103.08 a barrel, after earlier reaching $103.30.
Investors and traders have been nervously tracking the civil unrest in North Africa and the Middle East for any sign that Saudi Arabia, OPEC's leading oil producer, would be affected.
On Thursday Saudi Shi'ites staged protests in two towns in its oil-producing Eastern Province, demanding the release of prisoners they say are being held without trial.
In Libya, security forces used tear gas to disperse a protest against the regime of Muammar Gaddafi in the capital Tripoli. Several hundred opponents of Gaddafi began the protest in the city's eastern district after Friday prayers.
Meanwhile, rebels advanced on the major oil terminal of Ras Lanuf, clashing with forces loyal to Gaddafi.
Earlier, an air strike missed a rebel-held eastern military base that houses a big ammunition store.
The head of Libya's rebel National Libyan Council has vowed Victory or death, in a short speech in the town of Al Bayda in the rebel-held east of the country.
While the market focuses on the Shi-ite protests in Saudi Arabia, Christophe Barret, global oil analyst at Credit Agricole Corporate and Investment Bank, said he thought the risks were exaggerated.
Saudi Arabia is the main risk in the region. It has all the spare capacity, and if there is unrest and production disruption, then it means an explosion in oil prices. But I think the risk is an exaggeration, he said.
He argued there were always problems between the Shi-ites and the Sunnis. I don't think it will go like Libya, but the Eastern Province is a significant oil-producing province of Saudi Arabia, so that is why everyone is looking at it.
Unrest continues in other parts of the region. Iraqi security forces used water cannon and batons to disperse protesters in the southern oil hub of Basra as thousands of Iraqis rallied around the nation against corrupt officials and poor basic services.
Shi'ite Muslim rebels in northern Yemen said the military had fired rockets at their anti-government protests. And in Bahrain several people were reported hurt in fighting between Sunni and majority Shi'ite Muslims.
Libya's oil output has fallen to 700,000-750,000 barrels per day (bpd) from normal levels of 1.6 million bpd as most foreign oil workers have taken flight, according to Shokri Ghanem, the head of Libya's state-owned oil company.
The U.S. dollar traded flat against a basket of currencies <.DXY> as the euro strengthened following the European Central Bank's hawkish comments about rate rises on Thursday. A weaker dollar is supportive for oil prices.
(ECB chairman) Mr Trichet did surprise by announcing an almost certain increase in rates from 1.00 percent to 1.25 percent at the next meeting in April (much earlier than expected), Petromatrix analyst Olivier Jakob said in a note.
The market is now looking to U.S. non-farm payrolls data. Employment is expected to have increased by 185,000 in February, which would be the largest gain in almost a year.
If we see some strong numbers, that could give some further support, said Commerzbank's Fritsch. (Additional reporting by Florence Tan; editing by James Jukwey and Jane Baird)