* As much as 100,000 bpd crude output shut in Libya
* Concern that other big producers could suffer outages
* Coming up: S&P/Case-Shiller U.S. house price index
(Updates prices, adds analyst comment)
By Claire Milhench
LONDON, Feb 22 (Reuters) - Both Brent <LCOc1> and U.S. crude
oil <CLc2> rallied to 2.5-year highs on Tuesday on concerns the
revolt in Libya could spread to other major oil producers in the
Middle East and North Africa.
At 1030 GMT, Brent crude oil futures for April delivery were
up $1.12 to $106.86, after earlier touching $108.57, while U.S.
crude for April delivery was up at $96.68 as investors and
traders became increasingly nervous about contagion.
"Libya alone doesn't produce so much oil that there would be
a supply shortage ... even if there was a total collapse," said
Carsten Fritsch, an analyst at Commerzbank.
"It produces around 1.6 million barrels of oil per day, and
OPEC has spare capacity of up to 6 million barrels, so it is
more fears that this might spread to places like Algeria, Kuwait
or the United Arab Emirates," he added.
Libya is the third-largest oil producer in Africa, and at
least some 100,000 barrels per day -- about 6 percent of the
country's production -- have been shut in.
Analysts at JBC Energy said given that some of its major oil
fields are "controlled by more or less independent tribes and
the apparent loss of control of the regime of the coastal city
of Benghazi", the country's splitting up could not be ruled out.
Fighting has spread to the capital Tripoli [].
Amid reports that African mercenaries are being used to crack
down on protesters, [] some army troops have
switched sides to the opposition.
European oil and gas firms such as Shell <RDSaL> have
evacuated staff [] and German company Wintershall has
wound down production as a precautionary measure
[].
The Arab League plans to hold an emergency meeting in Cairo
at 1500 GMT to discuss the Libyan revolt [].
World leaders have condemned the use of force against
protesters in Libya, where at least 233 have been killed,
according to Human Rights Watch. []
Cracks are now appearing among Gaddafi's supporters, with
some ambassadors resigning and the Libyan mission to the United
Nations calling on the army to "move towards Tripoli and cut the
snake's head" [].
U.S. crude for March delivery <CLc1>, which expires on
Tuesday, was up at $93.77 after also earlier touching a 2.5-year
high at $94.49. There was electronic trading in New York on
Monday, but no settlement close as the exchange was closed for a
holiday.
SUPPLY DISRUPTION
A wave of protests across North Africa has had little impact
on oil supply until now. The outages in Libya this week are the
first to impact supply.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Stories about regional unrest: []
Factbox on Libyan oil and gas: []
Column on the Brent/WTI spread: []
Libyan oil map: http://r.reuters.com/jem28r
Interactive factbox http://link.reuters.com/puk87r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
International Energy Agency (IEA) chief economist Fatih
Birol said on Tuesday that oil prices were in the danger zone
and could rise further if turmoil continued in the Middle East.
[]
"Oil prices are a serious risk for the global economic
recovery," Birol told reporters on the sidelines of a conference
in Indonesia.
Member states would consider releasing oil from their
emergency stocks if supplies were disrupted as a result of
continuing turmoil in the Middle East, he added. The IEA is
adviser to 28 industrialised nations on energy policy.
U.S. crude prices were also boosted as traders rushed to
cover short positions in the Brent/WTI spread, which blew out to
a record $16 a barrel last week.
(Additional reporting by Francis Kan; Editing by Jason Neely)
