NEW YORK (CNNMoney) -- Oil prices jumped more than $2 a barrel in electronic trading Sunday following escalating violence in Libya, where the military called for an immediate cease-fire after allied forces fired on Libyan defense sites.
"It seems like things have stepped up and that means more uncertainty," said Peter Beutel, an oil analyst with Cameron Hanover. "Every incident that you have expands [uncertainty]."
The benchmark U.S. contract, West Texas Intermediate, for April delivery gained $1.95 to $103.02 a barrel. The more active May contract jumped $2.08 to $103.93 a barrel.
That's still comfortably below the $106.95-a-barrel high hit two weeks ago, but Beutel said he expects volatility to rule the day.
"[Volatility] just possibly couldn't get any higher," he said, adding that he wouldn't be surprised to see prices go up by $50 and then drop $100 over the course of the year. "Volatility is getting worse and worse each day."
Meanwhile, brent crude, the main European contract, rose $1.05 to $114.98 a barrel.
While Libya is Africa's third-largest oil producer and sits atop the continent's largest reserves, the country only contributes about 2% of the 87.5 million barrels of oil the world consumes every day.
Earlier this month, the International Energy Agency estimated roughly 1 million barrels per day of Libyan oil had been taken off the world market so far.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have pledged to increase production to make up for any lost oil due to unrest in Libya.
But concerns are less about Libyan production and more about how far the problems will spread.
Traders are worried about growing conflict in the Middle East, following protests in Yemen, Bahrain and Oman.
"It's spreading closer and closer to the Petroleum Gulf," said Beutel, and that's what's fraying investors' nerves.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.81%||3.85%|
|15 yr fixed||3.05%||3.07%|
|30 yr refi||3.79%||3.83%|
|15 yr refi||3.06%||3.06%|
Today's featured rates:
Uber CEO Travis Kalanick's parents were involved in a boating accident on Friday that left his mother dead. More
Santander Consumer USA only checked the incomes of 8% of its applicants for subprime auto loans, according to a new report from Moody's Investors Service. More
The Anita Borg Institute for Women and Technology confirmed that it has cut ties with Uber. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Betsy DeVos oversees a $1.3 trillion student debt program that touches 42 million Americans. Many borrowers complain about the servicing they receive. More