Moamer Kadhafi accused the West of wanting to seize Libya\'s oil and warned that a no-fly zone would backfire as his forces pounded rebel lines, setting a string of oil facilities ablaze.
The boss of Libya\'s state oil firm said the damage to infrastructure was minor but acknowledged that oil output was down more than two-thirds, as the price for London\'s main contract jumped to $116.50 per barrel.
"The colonialist countries are hatching a plot to humiliate the Libyan people, reduce them to slavery and control the oil," Kadhafi said on state television.
He again accused Al-Qaeda of being behind the insurrection that began on February 15 and called on inhabitants of Benghazi, the rebels\' main base, to "liberate" Libya\'s second city.
His government offered a $410,000 bounty for the capture of Mustafa Abdel Jalil, head of the rebel national council that declared itself the North African country\'s sole representative in Benghazi on Saturday.
Strong blasts rocked the rebel-held oil town of Ras Lanuf on Libya\'s central coast, forcing the insurgents back. A mechanic said a pipeline had been blown up.
An oil installation was also ablaze near As-Sidra 10 kilometres (six miles) further west although National Oil Corp boss Shukri Ghanem played down its importance.
"Fortunately, the explosion today was in a small storage supply facility in Sidra... It has not affected the production," Ghanem said, adding: "It was diesel, it\'s not crude oil."
Scores of rebels packed into dozens of vehicles and retreated into Ras Lanuf after several hours of sustained shelling and at least three air strikes west of the town.
It was the second time in as many days the rebels had been routed in front of the government-held hamlet of Bin Jawad, some 30 kilometres from Ras Lanuf.
Fighting in eastern Libya has killed at least 400 people and wounded 2,000 since February 17, medics there said.
In Zawiyah, just west of Tripoli, the battle for control of the strategic oil city was undecided.
"The revolutionaries control the centre of Zawiyah and Kadhafi\'s forces are surrounding it. It\'s 50-50," a long-term Moroccan resident said after crossing the border into Tunisia.
"There was no one in the streets, the town is completely deserted, and there are snipers on the roofs," he said, adding that he did not know which side they were on.
Government spokesman Mussa Ibrahim said: "Zawiyah is under the control of the army but there are still pockets of violence. There have been celebrations for hours."
But foreign journalists were unable to verify the government\'s claims as they were again unable to access the city.
Three BBC journalists who tried to reach Zawiyah earlier this week were "detained and beaten" before being subjected to a mock execution, the broadcaster said.
"This is yet another example of the horrific crimes being committed in Libya," a British Foreign Office spokesman said.
Both sides sent envoys to foreign governments as they stepped up diplomatic offensives amid the increasingly bloody stalemate on the ground.
Major General Abdelrahman al-Zawi, a member of Kadhafi\'s inner circle, landed in Cairo aboard a private Libyan plane, an airport official told AFP.
Although the purpose of Zawi\'s visit was not immediately clear, it came as Arab League foreign ministers prepared to meet at the body\'s Cairo headquarters at the weekend to discuss a no-fly zone over Libya.
Elsewhere, a "moderate member" of Kadhafi\'s regime was en route for Portugal, where he was planning to meet Foreign Minister Luis Amado ahead of a series of key diplomatic meetings in Brussels this week, an EU source said.
A Kadhafi envoy was also headed to Greece.
Britain and Germany said EU governments should "not work or co-operate" with Kadhafi as EU ministers prepared for talks on the North African nation.
In a joint letter to EU foreign policy chief Catherine Ashton, British Foreign Secretary William Hague and his German counterpart Guido Westerwelle said the crisis in the EU\'s "southern neighbourhood" presented a challenge on the scale of Europe\'s 1989 revolutions.
French President Nicolas Sarkozy\'s office said he would receive envoys from the rebel council and hoped to help it politically but Ashton declined to back a call by the European Parliament to extend recognition.
Senior members of US President Barack Obama\'s cabinet met at the White House to discuss options for action, amid pressure from key European and Gulf allies as well as the Republican opposition.
White House spokesman Jay Carney said a no-fly zone over Libya was still on the table but no decision had been taken.
Meanwhile international officials said they believed it was possible refugees fleeing Libya were being barred from crossing the border into Tunisia.
"Around 3,000 people crossed the border on Tuesday, which is a relatively low figure," compared with the 10,000 refugees that flooded across the border in previous days, said Monji Slim, head of the Red Crescent in Tunisia.
"I have heard that satellite images taken by the Americans and the British show concentrations of people on the Libyan side of the border," Slim added.
Crude oil prices rose in Asian trade Thursday with New York\'s main contract, light sweet crude for delivery in April, gaining 44 cents to $104.82 per barrel. Brent North Sea crude for April delivery rose 56 cents to $116.50.
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