By Marcus Leach

Surging oil prices were once again in the spotlight on Monday as the cost per barrel rose to almost $118 as the unrest in Libya continues.

Brent crude was up $1.60 to $117.57, whilst U.S crude was back up to $106.71, just shy of February’s high of $106.95 - the highest price since September 2008.

Libya provides two percent of the world’s output, and the continued fighting in the country, combined with fears of unrest spreading further afield to larger producers such as Saudi Arabia, has seen oil prices once again driven up.

“The major risk remains the prospect of the political unrest spreading to the Gulf producing region,” Caroline Bain of the Economist Intelligence Unit told Reuters. “However, even if there is civil unrest in Saudi Arabia, it is not a given that oil production will be affected.”

Brent prices reached a high of $119.79 on February 24th, with the European benchmark crude trading as high as $118.50 on Monday. As an OPEC member Libya was producing around 1.6 million barrels per day before unrest between Gaddafi’s proponents and those against his regime broke out.

According to the International Energy Agency that figure is now down by over a million barrels per day.

“Not only actual production losses but above all the threat of contagion spreading to neighboring regions will keep the geopolitical risk premium at a high level for the time being,” Commerzbank said in a report.