Oil prices rose sharply Monday as Israel continued attacks in Gaza for a third day.

U.S. light sweet crude was up about $3 to more than $40 a barrel in electronic trading on the New York Mercantile Exchange.

Brent North Sea crude for February delivery jumped nearly $3 to more than $41 a barrel in late morning trade in London.

The price increase reverses the trend of recent months when the global economic downturn slashed world demand for energy.

Traders say prices rose as Israeli-Palestinian violence raised fears of wider tensions in the oil-rich Middle East.

The United Arab Emirates on Friday gave notice of output cuts in compliance with OPEC production cuts agreed earlier this month.

OPEC announced the cuts last week to stabilize oil prices that have plunged 76 percent from a record high of more than $147 a barrel in July.

OPEC President Chakib Khelil has said the cartel could meet next month and cut production again, if needed.

Some information for this report was provided by AFP, AP and Reuters.