World oil prices surged nearly 4 percent Tuesday after militants said they would broaden attacks on Nigeria's oil industry, threatening to cut deeper into supplies from the world's eighth-biggest exporter.

U.S. crude rose $2.39, or 3.7 percent, to $66.31 a barrel on the New York Mercantile Exchange -- the highest since early October. Oil is within sight of its $70.85 record of Aug. 30, fired by Nigerian violence and Iran's duel with the West over its nuclear program.

Tuesday's push came as militants behind a spate of kidnappings and attacks on oil facilities in the West African nation's oil-rich Niger Delta threatened to use more aggressive tactics against oil workers and their families from Feb 1.

"Nigeria's escalating problems ... are boosting prices. Nigeria puts almost 2.5 million barrels of crude into the market daily -- around 3 percent of global oil output," said analyst Tobin Gorey of the Commonwealth Bank of Australia.

The country's biggest foreign operator, Royal Dutch Shell, has already evacuated staff from some facilities and scaled back output as violence escalated over the past week. ExxonMobil Corp. denied reports it had suspended exports.

"Nigeria has always been a difficult place and now they have targeted the offshore platforms. They've never done that before. Obviously, that's very dangerous," said Craig Pennington, an analyst with investment bank Schroders.

London Brent crude was up $1.72 at $64.90 after rising 58 cents on Monday when European markets were open.

Crude prices in New York have risen nearly 9 percent since the start of the year as doubts have grown about the reliability of supplies from Nigeria and Iran, and Iraq's oil industry struggles to get back on its feet.

Strong buying by big investment funds has added impetus.


The International Energy Agency sounded an alarm over the world's limited ability to pump extra oil. Almost all the spare capacity is in OPEC countries -- 1.5 million barrels per day.

The typically cautious IEA, adviser to industrialized consumer nations, said this figure was "below comfort levels."

The market would struggle to cope with a further reduction in Nigeria's exports of around 2.2 million barrels per day (bpd) or a disruption to Iranian exports of about 2.4 million bpd.

The United States and European Union say talks with Iran have failed to quell suspicion Tehran is seeking a nuclear bomb, despite its denials, and it is time for the United Nations Security Council to become involved.

Blanket sanctions such as an oil embargo are thought highly unlikely, but OPEC's second-biggest producer has said any crackdown could drive up world oil prices and has not ruled out using oil for leverage.