The price of oil in London climbed to its highest point in more than two years yesterday.
Brent crude futures rose as much as 0.5 per cent in early trading, largely as concerns continued to mount over civil unrest throughout parts of the Mena region.
Demonstrations continued in Bahrain and Yemen, as well as parts of Libya, which is the eighth-largest Opec producer with an economy that relies on oil revenues for about 95 per cent of its export earnings.
Fresh clashes have also been reported in parts of Iran, Opec's second-largest producer after Saudi Arabia.
Countries in the Mena region account for more than a third of the world's oil production, according to the latest report from the British energy giant BP.
Brent crude for April delivery increased by as much as 52 cents yesterday morning, topping US$104 a barrel on London's Institution of Civil Engineers (Ice) exchange. It previously closed at $103.78, the highest level since September 2008.
Concern that crude shipments may be disrupted because of political risks in the region have been fuelled by reports of fresh tensions between Iran and Israel. Officials from Israel this week reported that two Iranian warships were planning to sail through the Suez Canal while en route to Syria, which Israel called an act of "provocation". About 1 million barrels of Gulf crude pass through the canal each day en route to Europe and North America.
While canal officials have said any such plans have ultimately been scrapped, the incident between Israel and Iran has further rattled markets already jittery about demonstrations in the region.
Some analysts have also pointed to support for the oil market as economic expansion continues to grow in the US, the world's largest user of oil. US officials recently raised their growth forecast for the year to a range of 3.4 to 3.9 per cent, up from 3 to 3.6 per cent.