Brent North Sea crude for delivery in May hit a high of $124.84, the best since August 4, 2008.
New York's main contract, light sweet crude for delivery in May, soared to $111.90 -- a level last seen in September of the same year.
Prices have risen sharply this week on the back of violent unrest in Libya, popular unrest in the wider Middle East and as the dollar has weakened against the euro.
"Another day and another upside move on oil," said PVM Oil Associates analyst David Hufton.
"All eyes are focused on Libya and the news for those looking for a quick resumption of supplies and lower oil prices is not good," Hufton said.
Libyan leader Moamer Kadhafi's troops have destroyed the infrastructure of the only oil fields under the control of his opponents, cutting off their only source of finance."