Oil rose on Wednesday as escalating violence in Libya threatened the OPEC nation's oil infrastructure and markets braced for a potential prolonged disruption.
Prices jumped to close in on fresh 2-1/2 year highs on news that fresh airstrikes hit Brega, about 2 kilometers (1.2 miles) from a Libyan oil terminal, after Muammar Gaddafi launched a land and air offensive to retake territory in Libya's east.
It looks like an attack fairly close to what is one of Libya's largest storage and export terminals, said Andy Lebow, trader at MF Global in New York.
It's hard to say if the Libyan government is trying to target oil infrastructure in the east or whether they're just targeting rebel held areas, but the market's reacting to this threat either way.
Brent crude traded up $1.89 to $117.31 a barrel. Brent hit a 2-1/2 year high near $120 a barrel on February 24 on the Libyan crisis.
U.S. crude futures rose $2.21 to $101.84 a barrel at 11:45 a.m. EST.
The head of Libya's oil company, Shokri Ghanem, told Reuters the nation's problems could push prices over $130 a barrel if they persist.
Crude earlier pared gains after the release of U.S. oil inventory data from the Energy Information Administration showed inventories at the Cushing, Oklahoma delivery point for the New York Mercantile Exchange's oil futures, contract hit a record high.
Total inventories of both crude and refined products fell, however.
(Reporting by Robert Gibbons, Gene Ramos, David Sheppard, Matthew Robinson in New York; Jessica Donati-Bourne in London; Florence Tan in Singapore; Editing by Marguerita Choy)