Oil prices fell to near $98 a barrel Monday June 20, 2011, extending a big loss from Friday after a report said Saudi Arabia plans to boost its crude production.

By early afternoon in Europe, benchmark oil for July delivery was down $1.13 to $98.16 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2.64 to settle at $99.29 on Friday.

In London, Brent crude for July delivery was up 20 cents to $118.98 a barrel on the ICE Futures exchange.

Saudi newspaper al-Hayat reported Friday that the country will increase production by 13 percent, or about 1.14 million barrels per day, to boost global supplies and help lower prices. Earlier last week, the Organization of Petroleum Exporting Countries failed to reach consensus to raise output and left the cartel's production quotas unchanged.

"We suspect that oil prices will continue to move lower over the weeks ahead as the ramifications of the Saudi production increase works itself through the supply chain," said Edward Meir at MF Global in New York, noting that the Saudis "are intent on bringing prices down in order to avoid getting OPEC blamed for an energy-induced recession."

Fighting in Libya since February has shrunk global crude output by shutting down the OPEC nation's 1.6 million barrels a day of production. Political violence and upheaval in the Middle East and North Africa this year has probably added about $15 to the price of oil, said Paul Sheard, global chief economist at Nomura.

"There's quite a substantial risk premium built into the oil markets at the moment," Sheard said. "Oil is one of the wild cards of the global economy."

Nomura expects Brent to average $109 this year and $107 next year.

Analysts are concerned an escalation of violence and instability in the Middle East would send oil prices higher and undermine global economic growth.

"If Brent goes to $140, for sure you're going to have a double-dip recession in most advanced economies," said Nouriel Roubini, the New York University economics professor known for predicting the financial crisis. "Demand is growing fast and supply is not growing fast enough."

This week, investors will be eyeing the latest economic data from the U.S. and China. Some analysts expect Chinese crude consumption to remain robust despite signs economic growth may be weakening.

"Chinese oil demand growth has shown no signs of a slowdown this year, despite economic activity moderating," Barclays Capital said in a report. "The growth path is unlikely to be altered significantly by moderating overall economic activity."

U.S. retail sales and Chinese inflation and industrial production figures are scheduled to be released Tuesday.

In other Nymex trading in July contracts, heating oil rose moved up 0.01 cent to $3.1061 a gallon while gasoline added 0.14 cent to $3.0191 a gallon. Natural gas futures gained 5 cents to $4.807 per 1,000 cubic feet.