Oil hits 2.5-year high, nears $120

Brent crude rose towards $120 a barrel and US crude hit a 2-1/2-year high above $108 on Monday. Unrest in the Middle East and North Africa kept the focus on oil supplies as economic growth bolstered demand.

Iran's oil minister said there was no need for the Organization of the Petroleum Exporting Countries to hold an extraordinary meeting, adding to price support.

Iran is holder of Opec's rotating presidency in 2011. ICE Brent rose $1.05 to a high of $119.75 a barrel, its highest since Feb. 24, before slipping back to trade around $119.50 by 1223 GMT.

US crude was up 30 cents at $108.24 a barrel by 1223 GMT, after touching $108.78 earlier in the session, its highest since September 2008.

Edward Meir, senior commodity analyst at brokers MF Global, said investors seemed to be in no mood to sell the markets despite the "less than compelling fundamental backdrop".

Analysts say the loss of oil from Libya has been more or less offset by Saudi Arabia, while the Japanese crisis should also reduce oil import demand, suggesting "there likely is a statistical surplus in the system right now", Meir said.

"However, participants are not bothering with data for the moment, as the focus remains on headlines out of the Middle East. Moreover, the fact that global growth has yet to show any significant sign of decelerating is also keeping the "buy commodities" theme very much intact," he added.

The government of Libya - the world's 17th-largest oil producer and Africa's third-largest - has sent an envoy to Greece to discuss an end to fighting, but gave no signs of any major climb down in a war that has ground to a stalemate between rebels and forces loyal to Muammar Gaddafi.

Follow Emirates 24|7 on Google News.