New York's main contract, light sweet crude for delivery in July, soared 2.51 percent, or $2.11, to $86.21 per barrel in morning trade. Brent North Sea crude for July delivery added 2.67 percent, or $2.66, to $102.13.
Justin Harper, market strategist for IG Markets Singapore, said prices "saw a huge boost... after weekend news that Spanish banks were bailed out by the EU and Chinese inflation eased".
He said in a report that oil saw its biggest rose in five months after suffering heavy losses recently because of the eurozone troubles, increased supply, rising stockpiles and threats of weaker global demand.
The crude rally mirrored that of the euro, which rose after the 17-nation eurozone agreed to lend Spain up to 100 billion euros ($125 billion) to rescue its battered banks.
The Spanish bailout package, which was agreed over the weekend, marked a dramatic climbdown for Madrid, which had denied any need for outside aid to prop up its troubled lenders.
Despite the bailout, Phillip Futures said in a report that Spanish concerns as well as upcoming elections in debt-ravaged Greece will be the predominant factors moving crude markets this week.
"The crisis in Spain, coinciding with the prospect of Greece exiting the euro after elections on Jun 17, will dominate investor sentiment this week," it said.
Meanwhile, numbers released on Saturday showed China's inflation easing to 3.0 percent in May, the slowest pace in the consumer price index since Jun 2010.
It was also below market expectations for a 3.2 per cent rise, according to a poll of 15 economists by Dow Jones Newswires.