Oil prices held firm near 2-1/2 year highs on Tuesday as the revolt in Libya disrupted more supplies, but there was no repeat of Monday's spike as both OPEC and the IEA said they could help meet any shortage.
Turmoil in Libya drove prices as much as 6 percent higher in the previous session, taking Brent crude in London to almost $109 a barrel for the first time since 2008.
In a defiant speech on Tuesday, Libyan leader Muammar Gaddafi refused to step aside on Tuesday and threatened tougher action against protests, as rebel troops said eastern regions, including major oilfields, had broken free from his rule.
Two more oil firms, Italy's ENI and Spain's Repsol, halted output due to nationwide unrest in Africa's third-largest producer, cutting some 13 percent of its 1.6 million barrels per day (bpd) of crude oil production.
"We've lost 300,000 bpd of production already with the potential for further cuts to output and exports," said Andy Lebow, a trader at MF Global in New York.
"The major underlying fear in the market is that these protests spread in the region to even larger producers like Saudi Arabia. While that might not look likely right now, even a hint of real problems there could send prices vertical."
The following lists key facts regarding Libya's oil industry:
But oil pared early gains after Saudi Arabian Oil Minister Ali al-Naimi said the Organization of the Petroleum Exporting Countries [OPEC] would meet any real supply shortages, though he stopped short of announcing more oil production immediately saying prices were driven primarily by speculation and fear.
The International Energy Agency [IEA], which advises industrial countries on energy policy, also said member countries may decide to release emergency oil stocks if the situation in Libya created a real physical shortage in the market.
The IEA rarely opens the taps but members hold 1.6 billion barrels of emergency oil stocks. They were last tapped in 2005 after Hurricane Katrina crippled U.S. Gulf oil operations.
At 2:09 p.m. EST, Brent crude traded up 11 cents to $105.85 a barrel, off earlier highs of $108.57 a barrel. Brent hit a 2-1/2 year high of $108.70 a barrel on Monday.
U.S. crude for March delivery, which expires at the end of the session, rose $7.13 to $93.34 a barrel, after earlier touching $94.49, the highest level since October 2008. The more actively traded April contract gained $5.27 to trade at $94.98 a barrel.
The stronger gains in U.S. crude was partly explained by the fact that while the contract was active in electronic trading on Monday, there was no settlement as the exchange in New York was closed for the Presidents Day holiday.
Oil product traders operating in the Mediterranean also said exports from Libya were severely disrupted on Tuesday, but some traders said cargoes were continuing to load.
Saudi Arabia's Naimi, speaking on the sidelines of the International Energy Forum in Riyadh, said he saw no shortage in the market despite the unrest in Libya, and said worldwide oil spare oil capacity was between 5-6 million bpd.
Around two-thirds of that is estimated to be in Saudi Arabia, the world's largest oil exporter.
"What I would like you to convey to the market: right now there is absolutely no shortage of supply," Naimi told a news conference.
"I think this is a situation of fear, concern which will be very short term and will have no long range effect," adding he did not see prices spiking toward $150 a barrel as they did in 2008, before crashing as the economic crisis took hold.