NEW YORK — Oil prices soared to their highest level in more than two years as Libyan leader Moammar Gadhafi urged his supporters to attack protesters who are violently challenging his 42-year rule.
Only a small part of Libya's oil production appeared to be affected, though analysts fear that similar revolts will spread to OPEC heavyweights like Iran.
Benchmark West Texas Intermediate for April delivery jumped $5.71, or 6.4 percent, to settle at $95.42 per barrel on the New York Mercantile Exchange. Oil hasn't been that high since it settled at $97.92 on Oct. 1, 2008.
U.S. prices for regular unleaded gasoline held steady overnight at $3.171 per gallon. In Florida, the average was $3.159, while it was $3.108 in the bay area, according to AAA.
Libya holds the most oil reserves in Africa and is the world's 15th-largest crude exporter at 1.2 million barrels per day, according to the Energy Information Administration. As the Libyan government cracked down on protesters, Western oil companies including Eni and Repsol-YPF temporarily suspended oil production in the country. BP has started evacuating workers. Other oil companies, including Royal Dutch Shell, Marathon Oil and Germany's Wintershall, also started pulling out employees.
The International Energy Agency said on its website that it is ready "to make oil available to the market in the event of a major supply disruption." The Wall Street Journal reports that the IEA plans to meet this week to discuss the possible release of strategic stockpiles, if necessary.
The main concern stalking markets is that revolts in the Middle East and North Africa will spread to other members of the Organization of Petroleum Exporting Countries, particularly Iran, the group's second-largest producer.
Energy consultant Jim Ritterbusch said a "fear premium" has added about $10 per barrel to the price of oil. That means prices could tumble once the region settles down. "But that doesn't look like it's going to happen any time soon," he said. Looking ahead, there are also knock-on effects from high oil prices. A jump in energy costs could hurt consumer spending and stymie a fragile recovery in developed countries.
The crisis in the Middle East and North Africa will put added pressure on weaker economies, especially those in Europe, according to Capital Economics. In the United States, a run-up in fuel costs could force businesses and consumers to spend less on other things, slowing both the economy and the pace of hiring.