* Impact of Mideast unrest could linger for a decade
* OPEC ministers and producers say no physical shortage
By Edward McAllister
HOUSTON, March 10 Though OPEC officials have
done their best to quell fears about Middle East oil supply
disruptions, experts warn that Libyan unrest could signal a new
period of prolonged oil market jitters.
"There is no panic," Algeria's oil minister Youcef Yousfi
said at the high-profile CERA Week conference in Houston this
week, attributing the stellar rise in oil prices to speculators
and market psychology.
Oil executives from Total SA (TOTF.PA), Hess Corp (HES.N)
and BP Plc (BP.L) joined the chorus, saying there is no
pressing shortage of physical oil supplies.
But not everyone has remained as composed as OPEC ministers
amid the highest oil prices in over two years.
The legacy of Mideast unrest will linger in the market for
years, making it difficult to keep a ceiling on crude prices,
conference speakers said.
"This is a new risk that will be in the marketplace for the
next ten years," said Ed Morse, the arriving head of
commodities research at CitiGroup (C.N).
Civil unrest in North Africa and the Middle East - which
spread from Tunisia to Egypt, Bahrain, Yemen and Saudi Arabia -
has pushed oil prices in London and New York way above $100 a
barrel in recent weeks. On Wednesday, Brent crude in London
settled above $115 a barrel.
Fighting in Libya has cut oil output to half a million
barrels per day from the more than 1.5 million bpd of
production before widespread protests broke out last month
against long standing Libyan leader Muammar Gaddafi
[ID:nLDE7282LJ]. Cuts in Libyan production have forced top
producer Saudi Arabia to increase output.
Physical supply of Libyan sweet crude - for which there is
little spare capacity in the world - will struggle to come back
online quickly, Morse said.
"It is an illusion to think that Libyan crude production
will be anything near 1.5 million barrels a day a year from
now," he added, citing technical issues that often arise after
disruptions to crude supply.
Buyers like India and China, concerned about supply
disruptions, could begin stockpiling crude despite higher
prices, Morse said.
BP's (BP.L) head of strategy and policy, Ian Smale, said
that trying to predict a cap on crude oil prices in the current
environment is very difficult, especially as demand continues
"The mechanisms for providing a floor to oil prices are
absolutely in place. The mechanisms for providing a ceiling to
oil prices are a lot more difficult to see," Smale said, adding
that the role of OPEC in shaping the supply outlook will likely
increase with demand in the years to come.
(Editing by Chris Baltimore and Marguerita Choy)