Muammar Gaddafi struck at rebel control of a key Libyan coastal road for a second day on Thursday but received a warning he would be held to account at The Hague for suspected crimes by his security forces.
Venezuela said Gaddafi had agreed to its proposal for an international commission to negotiate an end to the turmoil in the world's 12th largest oil exporting nation.
But a leader of the uprising against Gaddafi's 41-year-old rule rejected any proposal for talks with the veteran leader.
In Paris, French Foreign Minister Alain Juppe said France and Britain would support the idea of setting up a no-fly zone over Libya if Gaddafi's forces continued to attack civilians.
The uprising, the bloodiest yet against long-serving rulers in the Middle East and North Africa, has torn through the OPEC-member country and knocked out nearly 50 percent of its 1.6 million barrels per day output, the bedrock of Libya's economy.
In Libya's east, the site of a struggle for control of a strategically vital Mediterranean coastal road and oil industry facilities, witnesses said a warplane for a second day bombed the oil terminal town Brega, 800 km (500 miles) east of Tripoli.
Warplanes also launched two raids against the nearby rebel-held town of Ajbadiya, witnesses said.
Gaddafi's son, Saif al-Islam, said the bombing of Brega was intended to scare off militia fighters and gain control of oil installations.
"First of all the bombs (were) just to frighten them to go away," he told Britain's Sky News. "Not to frighten them."
But on the ground, events appeared to turn against Gaddafi, as rebels spearheading the unprecedented popular revolt pushed their frontline against government loyalists west of Brega, where they had repulsed an attack a day earlier.
The opposition fighters said troops loyal to Gaddafi had been driven back to Ras Lanuf, home to another major oil terminal and 600 km (375 miles) east of Tripoli.
They also said they had captured a group of mercenaries.
In an angry scene at al-Uqayla, east of Ras Lanuf, a rebel shouted inches from the face of a captured young African and alleged mercenary: "You were carrying guns, yes or no? You were with Gaddafi's brigades yes or no?"
The silent youth was shoved onto his knees into the dirt. A man held a pistol close to the boy's face before a reporter protested and told the man that the rebels were not judges.
In The Hague, International Criminal Court prosecutor Luis Moreno-Ocampo said Gaddafi and members of his inner circle, including some of his sons, could be investigated for alleged crimes committed since the uprising broke out in mid-February.