As early as February 2011, oil prices have gone up over 15 percent with some saying that it could reach the $200 per barrel level. Oil from the 12 members of the Organization of Petroleum Exporting Countries (OPEC) contributes 40 percent of the world’s oil demand. Majority of its members come from North America and the Middle East.

According to former US Federal Reserve Chairman Alan Greenspan, the Gulf War and the Iraqi War brought about the last two oil crises. The current unrest in some Arab countries could bring about a third one.

OPEC has significantly increased production of crude oil and the output for February of its 12 members is at its highest since September 2008. The decrease in Libya’s oil production has been compensated by increased production in Saudi Arabia. Aside from that, industrialized countries as well as OPEC members have sufficient amount of crude oil in their reserves.

Still experts say there is no room to be complacent as Saudi Arabia, a leading oil producer and exporter has witnessed demonstrations in recent days. Any serious turmoil in the country would have a huge impact on the world’s oil supply. The International Energy Agency (IEA) estimates that Saudi Arabia accounts for 11.6 percent of global production of crude oil. Its spare capacity represents 60 percent of the entire OPEC production which is 2.5 – 3 million barrels daily.

Ronald Stoeferle, an economic expert of Austria’s Erste Bank, believes that the current unrest in the Middle East would have a “domino” effect and it would take time before the situation returns to status quo. The current unrest in North Africa will have an impact on the oil supply in the European Union as it provides 16 percent of natural gas in 15 EU states with Spain and Italy requiring 55 percent and 43 percent, respectively.

In addition, while the amount of crude oil produced by Libya is only small, the impact of a pause in production cannot be discounted. Eleven of Libya’s 14 export destinations come from the European Union. Italy, Ireland, and Austria represents more than one-fifth of its crude oil imports. Increasing oil production in Saudi Arabia to ease the negative impact on European countries is difficult because of the quality of oil it produces as well as some geographical reasons.

The current supply of oil in the reserves of OPEC and other oil-producing countries is still sufficient until the beginning of April. So unless there is no other situations that take place in the top oil-producing countries, the price of oil in the international market is unlikely to increase again.

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