Oil prices are hovering near recent highs after an air strike in Libya and fresh clashes between government forces and rebels fanned supply fears.
Brent crude was 0.2% higher at $116.58 in Asian trade. Earlier in US trading, it had almost touched $118 a barrel.
US light, sweet crude was 0.4% higher in Asia at $102.61.
Analysts warned prices would climb further if conditions in Libya and the Middle East worsened, fuelling inflation and slowing global growth.
"Any time oil moves higher, it gets people nervous about future growth and inflation," said Bart Melek of TD Bank Financial Group.
Short-term solution?
Stock markets in Asia were mixed as investors priced in a better-than-expected industrial output figure from South Korea.
Seoul's main Kospi index added 1% in early trading, while Japan's Nikkei 225 index gained 0.5%.
However, analysts warned that markets would remain volatile in the near future.
Robert Lutts of Cabot Money Management said that stock markets were adjusting to the new environment of high oil prices and beginning to realise that there was no short-term solution.
"We are going to live with this uncertainty for a some time," he said.