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London - Brent crude oil futures rose above $112 a barrel on Tuesday, supported by worries that continued unrest in the Middle East and North Africa could threaten supplies even as Saudi Arabia ramped up output.
Brent futures for April were up 49 cents at $112.29 a barrel by 1104 GMT. The contract gained over 10 percent in February, its biggest monthly percentage rise since May 2009. US crude rose 33 cents to $97.30 a barrel.
Both benchmarks surged to their highest in 2-1/2 years last week as the revolt in Libya cut supply and spurred fears that tensions could spread to other oil producers in the region.
Almost half of Libya's output has been cut as a result of the departure of oil workers, Libya's National Oil Corporation chairman, Shokri Ghanem, said on Tuesday.
Saudi Arabia's pledge to pump more has helped to prevent a further surge in the price of oil, while Iraq announced an increase in average oil exports in February.
"Saudi Arabia has compensated for supply losses in Libya, which has prevented a further price rise so far. The biggest OPEC producer is likely to be already producing more than 9 million barrels of crude oil a day at present," Commerzbank analysts said in a note.
"Saudi Arabia's spare capacities are thus another good 3 million barrels a day. The market is likely to get nervous, at the latest, when spare capacities drop below 2 million barrels a day."
In Oman, a small oil producer, the army fired in the air, wounding one person, as it moved to disperse protesters near the northern port of Sohar.
Some analysts noted that the Saudi move to increase supplies could be mirrored by other oil producers keen to benefit from the current strength in prices.
"The Saudi unilateral decision to increase supplies also implies that the OPEC quotas are de facto written off, and Kuwait has already started giving signs that it will likely follow the steps of Saudi Arabia," Petromatrix's Olivier Jakob said.
"At current prices it makes sense for both Kuwait and the UAE to also increase supplies rather than stay idle and watch Saudi Arabia increase its market share."
Investors awaited the latest US weekly crude inventories data from industry group American Petroleum Institute at 1630 GMT. Economists polled by Reuters expect an increase in stockpiles for a seventh consecutive week on higher imports.
Oil spikes could hit growth
The IMF has warned that global economic growth could suffer if the price of oil stays at its current high level for an extended period.
The European Commission expects oil prices to average around $100 a barrel this year, EU economic and monetary affairs commissioner Olli Rehn said on Tuesday.
"Based on the normal methodology we would expect the oil price would be somewhat higher than $100 a barrel this year," Rehn said. "With these oil prices, the impact on economic growth in Europe is still relatively limited," he told a news briefing, adding that he did not think there would be a double-dip recession in Europe.
In China, manufacturing growth slowed in February to a six-month low, according to an official survey, as the government's sustained campaign to tame inflation weighed on industrial activity.
China is targeting 7% per year annual economic growth from 2011-2015, down from the average growth of 11.2% in the last five year period.
