Oil prices rose towards $102 a barrel on Thursday on fears Norway's oil output could be sharply cut after oil major Statoil called a lockout in a bid to end the workers' strike.

A lockout means a complete shutdown of Norwegian oil and gas production, virtually guaranteeing government intervention and an end to the strike, which is now in its 12th day.

"The likelihood is that the strike will end sooner than expected. Prices rose in a knee-jerk reaction," said Carsten Fritsch, analyst at Commerzbank, anticipating the gains would dissipate once the government acts.

"Norway's reputation is that they are a reliable producer so if the lockout happens the government will step in."

Brent crude rose by $1.92 to $101.69, after hitting a high of $102.25 a barrel.

US crude futures firmed by 49 cents to $88.15, after reaching $88.77 a barrel.

Statoil said it would start shutting down production at its fields from July 9 and the shortfall would amount to 1.2 million barrels per day of oil equivalent as some 6,500 workers will be locked out of their work places.

"We need to keep in mind that this is exactly what the unions were trying to avoid as it should force intervention from the government to force the workers back to work," Olivier Jakob at Petromatrix consultancy, wrote in an oil note.

Jakob expects swift action from the Norwegian government, pointing out that after a smaller scale lock out announcement in 2004, the government stepped in the following day.

The dispute between the industry and the unions over pensions has so far reduced production from Norway, the world's eighth largest oil exporter, by around 13 per cent.

The government of Norway has the right to intervene to enforce the settlement in the strategic oil industry.

Norway's labour ministry said the decision to call a lockout of all workers was legitimate but declined to comment on whether the government planned to intervene in the conflict.

"A lockout is still a part of the legal strike," said Gro Oerset, senior adviser at the Labour Ministry. "We are continuing to follow the situations closely."

Later on Thursday, the European Central Bank is expected to further cut interest rates to support the flagging economy in the European Union.

All of Europe's biggest economies are in recession or heading there and show little sign of improvement soon, surveys showed on Wednesday, backing the view that the region's central bank is poised to ease policy. - Reuters