Brent crude leaped to a six-month high, gaining more than $3 to top $114 a barrel, on Tuesday as Western powers considered a military strike against Syria following last week's suspected chemical weapons attack.
U.S. crude also gained over $3 a barrel as fears mounted that Western intervention could further destabilize the Middle East, which pumps a third of the world's oil.
Western officials told the Syrian opposition to expect a strike against President Bashar al-Assad's forces within days, according to sources who attended a meeting between envoys and the Syrian National Coalition in Istanbul.
"As the rhetoric ratchets up around Syria, the geopolitical risk premium in the price of oil is once again widening," Dominick Chirichella of Energy Management Institute said.
Brent crude notched its biggest one-day percentage gain since October, rising by 3.3 percent to settle $3.63 higher at $114.36 a barrel, after an earlier high of $114.42.
U.S. crude rose rose $3.09 to settle at $109.01 a barrel, after earlier hitting $109.32, matching its high for the year so far. On Monday, it had fallen 0.5 percent when data showed U.S. durable goods orders had dropped the most in nearly a year.
While the White House ruled out any military effort to oust Syrian President Bashar al-Assad from power, oil market watchers pointed to signs that Washington and its allies are edging toward a limited use of force against the Syrian president's loyalists.
White House spokesman Jay Carney said that President Barack Obama had not made a decision on how the United States will respond to what it believes was an attack on civilians by the Syrian government.
On Monday, the United States put Assad on notice that it believes he was responsible for using chemical weapons against civilians last week in what Secretary of State John Kerry called a "moral obscenity."
"There's a lot of air in this market, and it's now hungry for the next headline," said Stephen Schork, the editor of The Schork Report in Villanova, Pennsylvania.
"So if we see more belligerent rhetoric, like Kerry's 'moral obscenity,' we're due for another leg up and you can't really sell."
President Francois Hollande said France stood "ready to punish" the perpetrators of a chemical attack in Damascus last week and would increase its military support to the Syrian opposition.
Declining Libyan production also supported prices. Libya's largest western oilfields closed when an armed group shut down the pipeline linking them to ports, its deputy oil minister said, reducing its oil output to a trickle.
Output is off nearly 60 percent to 665,000 barrels per day (bpd) due to a month-long disruption by armed security guards, who shut down main export terminals, its oil minister said.
In the United States, weak data on home sales and durable goods orders tempered views that the Federal Reserve could start paring its economic stimulus program as soon as September.
The American Petroleum Institute is scheduled to release its weekly oil stocks data on Tuesday afternoon.
A Reuters poll showed that U.S. commercial crude stockpiles were expected to have risen last week and gasoline inventories likely fell. (Additional reporting by David Sheppard in New York, Peg Mackey in London, Florence Tan in Singapore; Editing by David Gregorio, Andrew Hay, Bob Burgdorfer and Marguerita Choy)