Bank of America Merrill Lynch predicts there's a 30 percent chance British oil could reach $140 - perhaps even $160 a barrel, next year.

Those numbers would likely translate to about $120 to $140 in the U.S. as British oil tends to be more expensive than U.S. oil.

"With oil demand expanding rapidly and Libya production down by at least 1 million barrels per day, we forecast (the) Brent crude oil price to average $122 a barrel in the second quarter, and believe prices could briefly break through $140 in the next three months," said Sabine Schels, a commodity strategist at BoA Merrill Lynch in London.

"Under our upside risk scenario, Brent prices could average this year between $125 a barrel and $160 a barrel," she added.

A hike in British oil prices could lead to average U.S. gas prices between $4 and $5 a gallon.