President Barack Obama’s chief of staff said Sunday that the administration was evaluating the possibility of tapping into the country’s strategic oil reserves — totaling 727 million barrels — as a way of contending with rising gasoline prices.

Releasing those supplies could cool off overheated energy markets, but it also would put a tighter squeeze on the world’s oil supplies as the global economy recovers and consumption rises.

Oil prices continued to set new post-recession highs Monday as forces loyal to Moammar Gadhafi pounded rebels near a key oil port in Libya. It’s unclear how long the country’s oil exports will be cut off, and traders prepared for a worst-case scenario in which world supplies would be under pressure for months. .

Benchmark West Texas Intermediate crude for April delivery gained 52 cents at $104.95 per barrel on the New York Mercantile Exchange. The price almost hit $107 per barrel earlier in electronic trading, the highest since Sept. 26, 2008.

In London, Brent crude added 32 cents at $116.29 per barrel.

The rise in oil is driving U.S. gasoline prices to levels that weren’t expected for at least another month. Pump prices have jumped an average of 39 cents per gallon since the Libyan uprising began in mid-February, forcing motorists to pay an additional $146 million per day for using the same amount of fuel. The national average hit $3.509 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service.

Libya, which sits on the largest oil reserves in Africa, has been engulfed in a four-week rebellion as militants try to oust Gadhafi after 41 years in power. Officials in the country say oil fields continue to operate, but daily exports of 1.5 million barrels could be cut off for some time.

On Monday, Libyan warplanes launched more airstrikes on rebel positions around the Ras Lanouf oil port as forces loyal to Gadhafi tried to keep rebels from advancing on his stronghold in the capital, Tripoli.

Saudi Arabia has increased production to make up for the loss of Libyan crude, which goes mainly to Europe.

The Energy Information Administration estimates OPEC can crank up production by another 4.7 million barrels per day. An extended shut down of Libya’s exports would slice that capacity by about 32 percent to around 3.2 million barrels per day. Most of the world’s spare capacity lies in OPEC nations, primarily Saudi Arabia.

"The question then is what else can happen," said Erik Kreil, who covers international energy markets for EIA. "If it gets worse in North Africa or the Middle East, production could fall further and you’ll have less spare capacity."

Global spare capacity fell below 2 million barrels per day in 2008 before oil prices spiked to an all-time record of $147 per barrel.

In other Nymex trading on Monday for April contracts, heating oil was unchanged at $3.0896 per gallon, while gasoline futures lost a penny at $3.0332 per gallon. Natural gas rose 6 cents to $3.870 per 1,000 cubic feet.