LONDON: World oil prices pulled back on Monday, after striking their highest levels since 2008 in earlier Asian trade on the back of the weak dollar and continued tensions in the Middle East and North Africa.
Brent North Sea crude for delivery in May sank 66 cents to $125.99 per barrel, after spiking as high as $127.02 around midnight. That was the highest level since August 1, 2008.
New York's main contract, light sweet crude for delivery in May, dipped 46 cents to $112.33, having earlier struck $113.46 attaining a level last witnessed in September of the same year.
The market fell back from those high points as the dollar regained strength against the euro.
"Crude oil prices slid slightly lower, in a correction, as the US dollar rebounded against the euro and added some pressure to the oil market, while positive prospects about peace agreements in Libya and Yemen dominated the oil market," said Sucden analyst Myrto Sokou.
"The positive sentiment continued as Yemen's President Ali Abdullah Saleh accepted a gulf Arab mediation plan that would see him hand power to his Vice President and would create a new opposition-led Yemen government.
She added: "According to a report from the African Union, Muammar Gaddafi accepted a roadmap to end the civil war in Libya, including an immediate ceasefire."
The European Union backs the African Union's diplomatic efforts to bring a peaceful end to the conflict in Libya, the spokesman for EU foreign policy chief Catherine Ashton said on Monday.
"We support the AU efforts to find a political solution to the situation in Libya," spokesman Michael Mann told a news briefing.
A delegation of African heads of state met Libyan rebel leaders in their stronghold of Benghazi on Monday to try to sell a peace plan already accepted by Moamer Qadhafi's regime.
Ashton will visit Cairo on Wednesday to take part in a meeting on Libya organised by the United Nations and which will also be attended by the African Union and the Arab League, Mann said.
Despite Monday's modest oil price pullback, investors remain jittery over potential supply disruptions if the unrest escalates in the Middle East and North Africa region, analysts said.
Popular uprisings have recently toppled the leaders of Tunisia and Egypt, and the unrest has spread to countries like Yemen and Syria.
The weak US unit tends to push dollar-priced crude higher, because it makes the commodity cheaper for buyers using stronger currencies.
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