Oil prices climb to highs in Asia

Oil prices continue to push higher, hitting their highest levels in two-and-a-half years, amid fears the unrest in Libya could spread to larger oil producing nations.

Brent crude rose 1.4% to $112.80 a barrel in Asian trade, while US light crude was up about 1% at $99.19.

The last time prices were this high was back in October 2008, and analysts said more gains may be on the way.

The high oil price weighed on Asian stock markets, and trading was mixed.

Japan’s Nikkei 225 index lost 0.7%. Singapore’s STI index, Hong Kong’s Hang Seng and South Korea’s KOSPI were little changed. In Taiwan, the main index added almost 1%.

More supply

Oil prices have been rising for months, but the uprising in Libya has caused a sharp increase in crude costs.

Libya is the world’s 12th-largest exporter of oil, with the majority of its output going to Europe.

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Supply concerns were amplified after French oil giant Total said it has started to shut down its oil operations in Libya.

Other oil companies have made similar moves in recent days.

Barclays Capital estimates that so far about 1 million barrels per day of production has been shut down.

The International Energy Agency and Saudi Arabia have promised to increase supplies in order to cover any shortfalls.

Tax effect

However, that has not eased the tensions in the oil markets.

Analysts said there are worries that oil prices may keep climbing, pushing up the cost of fuel and food.

That would hit consumers in the pocket and would result in slower economic growth and weaker corporate earnings.

“It would nail the economy,” said Mark Zandi of Moody’s Analytics.