The widening violence has driven oil prices up to around $109 a barrel, the highest level in 2 1/2 years -- not because of any significant production cutback but because of fears of long-term instability in the Middle East.

Some 1,000 people are reported to have been killed in the violence, which some analysts say is sliding into civil war between loyalists of Moammar Gadhafi, Libya's strongman leader for 42 years, and his rivals.

"The Libyan descent into chaos could have a profound impact on the unrest brewing in other countries of the region," the global security consultancy Stratfor observed.

"What happens in Libya will not just be critical for security in North Africa but for political stability in the largely Arab Middle East."

The Saudis, who have spare production capacity of around 5 million barrels a day, have pledged that the Organization of Petroleum Exporting Countries will pick up the slack if global oil supplies are cut back.

But one of the paramount concerns is that the political unrest in the Persian Gulf island kingdom of Bahrain will spread to Saudi Arabia, the world's leading producer, which is linked to Bahrain by a 15-mile causeway.

Libya is a mid-tier producer pumping 1.6 million bpd of high quality crude, 2 percent of global oil output. Of that, 1.1 million barrels are exported, mostly to Europe.

Libya has proven reserves of some 44 billion barrels and is ranked 17th among world producers. A civil war would probably pit rival oil-producing regions against each other.

The bloodshed has had a minimal effect on oil supplies so far, with production cut by some 50,000 bpd. That's only a fraction of Libya's output but by all accounts its oil and gas industry is gradually shutting down.

Foreign oil companies, dozens of which raced into Libya when U.S. and U.N. sanctions were lifted in 2005, are now evacuating their personnel. BP, Shell, France's Total, Repsol of Spain and OMV of Austria have all withdrawn expatriate staff and their families.

Italy's ENI reported that the underwater Greenstream natural gas pipeline to Italy was shut down Tuesday.

U.S. giants like Exxon Mobil, Chevron, Conoco and Marathon Oil Corp. have yet to say what they're doing but they will likely evacuate if the bloodletting gets worse.

On Monday, BP said it was suspending plans for a major gas exploration program under a $900 million agreement signed in 2007.

Many of Libya's oil fields are in the east, where tribes have risen against Gadhafi.

Sheik Faraj al-Jazeera, a tribal leader in the south where there are also oil fields, threatened to halt all distribution there if the bloodshed goes on.

Saudi Arabia, the world's leading producer, is watching what's happening in neighboring Bahrain with growing disquiet.

This stems largely from Riyadh's suspicions its regional rival, Iran, has had a hand in the protests that largely center on Bahrain's Shiites. They comprise 70 percent of the population.

Riyadh fears the political turbulence could spread to its Eastern province, the center of its oil industry where Shiites are the majority, and other gulf monarchies.

Saudi Arabia has reserves of 267 billion barrels of oil and produced around 10 million bpd. Long a U.S. ally, these days most of its exports go eastward to energy-thirsty Asia.

Riyadh declared this week that it is prepared to use military force to prevent Bahrain's 200-year-old Sunni monarchy from falling and to block the wave of political turmoil reaching its shores.

Recent spluttering protests in gulf producers Kuwait and Oman, have added to Saudi concerns.

Yemen, which borders Saudi Arabia, is of particular concern. A regime change there, or the secession of the restive south, could strengthen al-Qaida forces and threaten the kingdom's security.

Algeria, a major oil producer, is also threatened by unrest. It has Africa's third largest reserves, around 12 million barrels. It pumps natural gas under the Mediterranean to France and Spain.

Popular protests erupted Jan. 3, deepening a political crisis triggered by a power struggle between President Abdelaziz Bouteflika and the military. The government has cracked down heavily but the country seethes with discontent.

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