The MSCI Latin American stocks index dipped 0.09 percent to an 1-1/2 week low as gains in Brazil's oil company Petrobras offset losses in Mexico and Chile.
A revolt in Libya has killed as many as 1,000 people, with markets rattled about the potential disruption in oil supply, and US crude prices hit $100 per barrel.
Analysts fear a prolonged spike in oil prices will push up inflation and weigh down on global growth.
"The conflict in Libya and worries about global growth due to this problem are pushing the market through important support levels," said Fernando Gonzalez head of consultancy Fast Profit in Mexico City. Latin America stocks recently mounted a modest rebound from their lowest level since September, but sharp losses this week erased much of the optimism.
"I only see more uncertainty ahead," said Jose Francisco de Lima Goncalves, chief economist of Banco Fator in Sao Paulo. "I think we're going to have more off days ahead."
Regional airlines suffered on the higher crude prices. Shares of Gol, Brazil's second-largest airline, sank 4.78 percent. Rival TAM gave up 3.87 percent.
Usiminas, Brazil's biggest producer of steel products for the car industry, sank 5.18 percent. Profit margins at the company tumbled to their lowest level in 18 months in the fourth quarter.
But bets that state-run oil company Petrobras will gain from any disruption in global oil supplies pushed its preferred shares up 3.38 percent. Rival OGX moved up 2.51 percent.
The energy company gains helped Brazil's benchmark Bovespa index shake off early losses to rise 0.71 percent.
Mexico's IPC index fell 0.86 percent, dropping below a key support at 36,600 points that had held up earlier this month to form a double-bottom pattern on its chart.
"The breaks we are seeing in individual stocks are below long-term tendencies, that is why we are seeing such big drops, so this downturn could last for a while," said Fanuel Fuentes, a technical analyst at brokerage Monex in Mexico City.
Shares in Grupo Mexico shed 2.43 percent and were trading below a strong trend line on its weekly chart that began in May 2010, Fuentes noted.
Mexico is an oil exporter, but its economy is closely tied to that of the United States. If a prolonged oil spike dents US consumer demand, Mexico would lose more than it gains from higher oil prices. Most of its exports are manufactured goods.
Chile's IPSA index dropped 1.72 percent, closing at its lowest level in nearly seven months. The index fell for the sixth straight day.
Airline LAN fell 4.12 percent. Retailers also declined, with Cencosud losing 1.74 percent and Falabella 2.58 percent.