Libyan tanks fired on rebel positions around the oil port of Ras Lanuf and warplanes hit another oil hub further east on Thursday as Muammar Gaddafi carried counter-attacks deeper into the insurgent heartland.
In the west, Gaddafi's army sought to starve out insurgents clinging to parts of Zawiyah after see-saw battles this week but the rebels took an important step toward international legitimacy when France recognized their national council.
NATO and the European Union were considering imposing a "no-fly" zone over the large North African desert state to stop Gaddafi using jets and helicopters against the rebels, who have seized cities east and west of the capital Tripoli.
More than 500 km (300 miles) to the east, Gaddafi's forces bombarded Ras Lanuf anew with projectiles crashing close to a building of the Libyan Emirates Oil Refinery Company.
There was a series of air strikes, and insurgents fired rockets out to sea to counter Libyan gunboats targeting their positions in the oil-producing east.
Later, at least two tanks were seen advancing toward rebel positions outside Ras Lanuf and opening fire.The rebels also reported an air strike on Brega, another oil port 90 km (50 miles) east of Ras Lanuf, indicating that Gaddafi loyalists had not only halted a westwards insurgent push in its tracks but were making inroads into the rebels' eastern centers.
Brega had not been targeted for several days.
During fighting in the east on Wednesday, an engineer told Al Jazeera television he had seen air strikes on eastern oil facilities, apparently the first time such a complex was hit.
OPEC member Libya was turning away tankers from ports as storage depots dried up because of supply disruptions caused by the fighting, which has paralyzed exports by Africa's third largest producer and a major supplier to Europe.
The Gaddafi counter-offensive has stalled a rebel advance from their eastern power base of Benghazi. They were forced to withdraw from the front-line town of Bin Jawad, just west of Ras Lanuf, after coming under heavy shelling earlier this week.
One fighter said rebels had retaken the heart of Zawiyah, the closest city -- 50 km (30 miles) west -- to Gaddafi's main stronghold Tripoli, from the army overnight. The center appeared to change hands twice during the day in a hard-fought battle.
"We fought until after three in the morning. It's all quiet here this morning," said the insurgent, named Ibrahim, by phone.
Mohamed, a Libyan in exile abroad who got through to a relative on the outskirts of Zawiyah on Thursday morning, said it was simply not clear who was winning the battle for the city but the army had it under siege to break the rebels' will.
"Yesterday (rebel sympathizers) tried to bring food and medicine from Subratha but failed. Government troops surround Zawiyah from everywhere. It is unclear who controls the center. It changes all the time. It's street to street fighting."
Authorities have kept journalists away from Zawiyah.
Military analysts believe Gaddafi may focus on quelling the revolt to the west before turning on the east, where the rebel-held city of Misrata, which residents said has been quiet for the past few days, would lie first in their path.
"Gaddafi forces are around the outside the city. They suffered a big defeat in Misrata. But they have heavy weapons," said an insurgent. "We are ready to defend any attack they launch even if we know it's going to be at a heavy price."
France became the first significant country on Thursday to recognize the rebel Libyan National Council as the legitimate representative of the Libyan people.
An official at President Nicolas Sarkozy's office said France would send an ambassador to Benghazi and receive a Libyan envoy in Paris. He was speaking after Sarkozy met officials from the Libyan National Council.
The Pentagon said it was preparing a "full range" of military options for Libya, including a no-fly zone. Plans were to be discussed by NATO ministers at talks in Brussels on Thursday. Military officers said a zone could be set up quickly.
Rebel forces have appealed to Washington and its allies to impose a no-fly zone to deny Gaddafi's forces the advantage of using warplanes and prevent him moving troops by helicopter.
A no fly zone could also help protect civilians who have been caught in the fighting, with scores if not more people reported killed so far in cities like Zawiyah. A burgeoning humanitarian emergency could hasten a no fly zone decision.
The International Committee of the Red Cross said Libya had descended into civil war with increasing numbers of wounded civilians arriving in hospitals in the east.
ICRC President Jakob Kellenberger called on Libyan authorities to grant the humanitarian agency access to western areas including the capital Tripoli and reminded both sides that civilians and medical facilities must not be targeted.
General Raymond Odierno, commander of the U.S. Joint Forces Command, said the U.S. military was probably capable of establishing a "no-fly" zone over Libya "within a couple of days" if the international community so decided.
U.S. Secretary of State Hillary Clinton has made it clear imposing a no-fly zone is a matter for the United Nations and should not be a U.S.-led initiative. Russia and China, permanent members of the U.N. Security Council, oppose the idea, which could entail bombing Libyan air defenses as a first step.
Italy, whose bases could play a critical role in any military action, has said it will back any decisions taken by NATO, the EU or the United Nations, clearing the way for U.S. naval forces based in Naples to be deployed if needed.
LINE IN THE DESERT
Counter-attacks by Gaddafi loyalists suggest the flamboyant leader, in power for four decades, will not go as quietly or quickly as fellow leaders in Egypt and Tunisia did in a tide of popular unrest rolling across the Arab world.
An upsurge of fighting appears to have cemented a de facto split of Africa's fourth biggest country into a government-held western area around Tripoli and an eastern region held by ragged but dedicated rebel forces.
EU foreign ministers will also discuss North Africa in Brussels on Thursday, focusing on how they can support the process of transition in Egypt and Tunisia, while using sanctions and other means to apply pressure on Gaddafi.
Two members of Libya's opposition council visited the European Parliament on Wednesday and said they wanted EU moral support, political recognition and a no-fly zone shielding the territory they hold -- but not any form of military intervention in a country sensitive about former colonial domination.
RUSSIA CUTS OFF ARMS TO LIBYA
In another move to isolate the Libyan leader, Russia will ban all weapons sales to Libya, the Kremlin said in a statement on Thursday, effectively suspending its arms contracts with the government of Gaddafi.
Libya's top oil official said the unrest had cut output to about half a million barrels per day from 1.6 million, but the oil industry was still centrally coordinated.
Brent crude oil rebounded above $116 a barrel, renewing fears global economic recovery could be hit.
Gaddafi has said he will die in Libya rather than flee. But a Libyan-born analyst said Gaddafi's inner circle had approached countries in Africa and Latin America about giving him refuge.