Benchmark crude for March delivery rose to US$89.5 in electronic trading on the Nymex, while in London, Brent crude rose to US$89.5 on ICE Futures exchange. The contract spiked by close to 4% to settle at US$89.3.
Nervousness has spread in the markets amid political instability in Egypt, as traders pull money from stocks to buy oil, gold and the dollar, which are considered less risky in uncertain times.
The uprising in Egypt follows protests this month that forced out the president of Tunisia, who fled to Saudi Arabia. Anti-government protests have also rocked Lebanon and Yemen.
Even if the unrest doesn't spread to a major oil producer in Africa or the Middle East, "the risks are still high as Egypt plays a key role in the global oil markets" because of the Suez Canal and Suez-Mediterranean pipeline which are major conduits for Persian Gulf oil to reach Europe and North America, according to Monday's Schork Report on the energy markets.