Brent crude oil prices rose to their highest since November 2014 on Monday ahead of US sanctions against Iran, the third-largest producer in oil cartel Opec, which kick in in November.
Benchmark Brent crude oil futures rose to as much as $83.27 a barrel and were at $83.21 at 3.39am GMT, up 48 US cents, or 0.6% from their last close.
US West Texas Intermediate (WTI) crude futures were up 32c, or 0.4%, at $73.57 a barrel.
WTI prices were supported by a report on Friday of a stagnant rig count in the US, which points to a slowdown in US crude production, which now rivals top producers Russia and Saudi Arabia.
Brent was pushed up by looming sanctions against Iran, which will start targeting its oil sector from November 4.
ANZ bank said on Monday that "the market is eyeing oil prices at $100 per barrel".
In a sign that the financial market is positioning itself for further price rises, hedge funds increased their bullish wagers on US crude in the week to September 25, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday, increasing futures and options positions in New York and London by 3,728 contracts to 346,566 during the period.
In a further sign of the impact that the US sanctions on Iran will have on the market, China's Sinopec says it is halving loadings of Iranian crude oil in October. China is the biggest buyer of Iranian oil.
"If Chinese refiners do comply with US sanctions more fully than expected, then the market balance is likely to tighten even more aggressively," Edward Bell, commodity analyst at Emirates NBD bank wrote in a note published on Sunday.
US President Donald Trump called Saudi Arabia's King Salman on Saturday, discussing ways to maintain sufficient supply once Iran's exports are hit by sanctions.
"Until sizable supply is offered up by Opec, ultimately traders will continue to push the envelope even more," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
"Even if [Saudi Arabia] wanted to bend to President Trump's wishes, how much spare capacity does the kingdom have?" asked Innes.
"We're going to find out very soon as approximately 1.5-million barrels (per day) of Iranian oil is effectively going offline on November 4. If the market senses that Saudi Arabia capacity is tapped out at 10.5-million bpd ... oil prices will rocket higher with the flashy $100 per barrel price tag indeed a reasonable sounding target," Innes said.
With oil prices soaring, there are concerns over their inflationary effect on demand growth, especially in Asia's emerging markets where weakening currencies are further adding to high fuel import costs.
Add the trade disputes between the US and other major powers, especially China, and economic growth into 2019 could be eroded.
Growth in China's manufacturing sector already sputtered in September as both external and domestic demand weakened, two surveys showed on Sunday.
In Japan, business confidence among big manufacturers declined in the last quarter its lowest in nearly a year, as firms felt the pinch from rising raw material costs and as global trade conditions worsened.