Oil futures settled at $105.02 Tuesday, down 42 cents from Monday, on the New York Mercantile Exchange.
$140 a barrel would have dire effects on the global economy, said Nouriel Roubini, professor of economics at New York University's Stern School of Business.
Roubini told reporters at a conference in Dubai that $140 a barrel or higher could cause advanced economies to fall into a recession.
"If you had the oil price going up to where it was in the summer of 2008, at $140 a barrel, at that point some of the advanced economies will start to double dip," Roubini said, according to Bloomberg News. "In the U.S., where growth is accelerating fast, a 15 to 20 percent increase in oil prices, there won't be double dip but growth reaching a stalled speed again."
Roubini was traveling and not available for comment to ABC News.
Markets are still jittery, traders concerned that unrest in the Middle East will disrupt the global supply of oil. After protests forced out the leaders of Tunisia and Egypt, rebels continue to fight for the third week to break Moammar Gadhafi's 41 year grip over Libya.
"My general feeling is you're probably going to constantly see some kind of negative news coming from that region which is going to keep pressure on oil to rise," said Tom di Galoma, head of fixed income rates trading at Guggenheim Securities. "This doesn't look like it's even close to being over."
Calls to President Obama to tap the nation's Strategic Petroleum Reserve continued. On Tuesday, Sen. Charles Schumer (D-N.Y.) joined the growing list of legislators asking the President to tap into the 727 million barrels of oil kept for emergencies.
"While I have long held, and continue to contend, that it is incumbent upon our nation to become energy independent we still require stable petroleum prices to fuel our economy," wrote Schumer in a letter to Obama. "As you are aware, the price of oil has a significant impact on our national economy, in industries ranging from aviation to agriculture. Additionally, high oil prices also affect working-class Americans who depend on a reasonable price of gas to fuel their travel to and from work."
Shelley Goldberg, director of Global Resources and Commodities Strategy at Roubini Global Economics, said it is possible that oil could reach $140 if the unrest in the Middle East further affects the supplies of OPEC and non-OPEC members.
Oil Prices: The Worst-Case Scenario
"The risk of sustained higher prices has increased," said Goldberg. "Dr. Roubini indicates that it could, but we're not saying that it will. There are a number of scenarios that could take place."
She said her firm is creating a scenario analysis of at least three situations studying the effect of oil prices on the global economy. A base case scenario is for prices to remain at the current levels of $90 to $100 a barrel. Goldberg said global markets may be sustainable at current oil prices. She added that her firm views oil as an investment worth watching.
"We like oil and favor it and think it should be in a portfolio," she said.
The second scenario is if the price of oil were to sustain at around $120 a barrel.
Goldberg said higher oil prices affect developed and developing economies in different ways. Both would experience "demand destruction," in which economies slow down due to the higher costs of oil, a major input. Emerging economies use crude oil mostly for industrial purposes, such as building infrastructure, said Goldberg. Developed economies, including the United States and United Kingdom, tend to experience the effects of oil prices on the retail level, like transportation.
Oil prices have affected consumers at the pump. The national average gas price is $3.52, up 14 cents from last week and 77 cents from a year ago, according to the Department of Energy's weekly figures released on Monday.
The worst-case scenario is the $140 a barrel and higher. Goldberg said the likelihood of oil reaching $140 a barrel is slim, but her firm is "not definitively outruling" that possibility.
"It would be a more detrimental scenario, not only exacerbating other emerging market nations," said Goldberg. "We would start to see indications of infrastructure damage to the extent that worldwide statistics show supply imbalance and decreases."
Consuming 19.2 Million Barrels of Oil a Day Leads to Vulnerability
Goldberg said "demand destruction" would actually take place in the U.S. at around $120 a barrel because at that level, she estimated the average price of gas would reach $4 a gallon.
But Goldberg said these were scenarios and not hard and fast rules.
"Essentially, it's very challenging to come up with the actual number that demand destruction kicks in," said Goldberg. She said each country has its own ability of varying degrees to import oil. She said the U.S. produces 5 million barrels of liquid fuels a day, with crude oil as the largest portion of that.
"But we're consuming 19.2 million a day," she said. "It makes us vulnerable."