Oil prices eased below $102 a barrel Thursday but remained near highs last seen in 2008 as fighting between rebels and government forces in Libya intensified amid efforts to reach a mediated resolution to the conflict that has cut crude supplies by more than half from the OPEC nation.

By early afternoon in Europe, benchmark crude for April delivery was down 80 cents at $101.43 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $2.60 to settle Wednesday at $102.23, the highest settlement since Sept. 26, 2008.

In London, Brent crude for April delivery was down 88 cents to $115.47 a barrel on the ICE Futures exchange.

President Hugo Chavez has spoken with Moammar Gadhafi about creating a bloc of friendly countries to help mediate a resolution to Libya's crisis, Venezuela's information minister said Wednesday. Venezuelan officials did not say how Gadhafi had responded to the proposal.

On Thursday morning, government warplanes launched an airstrike on Brega, a port town in Libya's rebel-held east, as opposition forces, including mutinous army units, deployed around the city's strategic oil installations.

"Reports on a peace plan for Libya have put pressure on oil prices," said analysts at Commerzbank in Frankfurt. "This dip in is only temporary in our view. It is doubtful that the protesters in Libya will agree to enter negotiations with Gadhafi."

The International Energy Agency said Wednesday that a power struggle between supporters and opponents of Gadhafi had cut up to 1 million barrels per day of crude production, more than the group's previous estimate of as much as 750,000 barrels per day.

Traders are also factoring in the possibility that political upheaval in other oil-rich countries could pinch global crude supplies.

"The spread of protests into other major oil producing nations such as Oman, Algeria and especially Saudi Arabia could keep this oil market on a boil for some time to come," Ritterbusch and Associates said in a report.

Analysts said sustained oil prices above $100 would eventually undermine consumer demand and threaten global economic growth.

With oil prices "at these elevated levels, the current global economic recovery is at significant risk of stalling," said Richard Soultanian of NUS Consulting.

The U.N.'s Food and Agriculture Organization said Thursday that global food prices reached new highs in February — rising for the eighth consecutive month — while warning that oil price spikes could provoke further increases.

In other Nymex trading in April contracts, heating oil fell 1.08 cents to $3.0469 a gallon and gasoline fell 2.62 cents to $3.0033 a gallon. Natural gas futures were up 1.6 cents at $3.834 per 1,000 cubic feet.