Oil climbs as supply fears persist

New York's light sweet crude for April, known as West Texas Intermediate (WTI), closed up 60 cents to $97.88 a barrel Friday, though still off the intra-day high Thursday of $103.41, a level last seen in September 2008.

Brent North Sea crude for delivery in April rose 78 cents to $112.14 per barrel, having rocketed on Thursday to $119.79 -- the highest level since August 2008 -- before sliding lower on profit-taking.

"Behind this volatility is the great uncertainty on the scale of supply outages in Libya and as to which country can compensate for these losses," said Commerzbank analyst Carsten Fritsch.

"Saudi Arabia has declared its willingness to compensate for the supply losses from Libya.

"However, many refineries in Europe that obtain their oil from Libya can only process light oil. It is questionable whether Saudi Arabia can deliver this (type of) oil."

Concerns of a complete cutoff of Libya's 1.6 million barrels a day of light crude drove prices upwards this week as Libya's leader Moamer Kadhafi appeared isolated in the capital Tripoli in the face of a popular uprising against his 41-year rule.

"At this rate, it will not be long before prices revisit the highs above $140 seen in 2008," analysts at research house Capital Economics said in a market commentary.

World powers on Friday were studying possible punitive measures against Kadhafi as the Libyan strongman's crackdown on a nationwide revolt grew more desperate.

Diplomats said they were studying a possible no-fly zone over Libya, as well as a travel ban and assets freeze against the Kadhafi family, amid mounting concern over a growing death toll.

Investors were also monitoring the situation in Bahrain, where thousands of protesters were staging a march and pressing an 11-day uprising against the monarchy, said Ong Yi Ling, investment analyst for Phillip Futures in Singapore.

"While Bahrain is not a major oil producer, it has close ties to Saudi Arabia, so it is important to the strategic balance of power in the Middle East," Ong said.