* Says impact of Middle East tensions overstated
* Keeps "buy" on Middle East-exposed Apache, Occidental
Jan 31 (Reuters) - Goldman Sachs said it was bullish on crude oil on strong global demand that is growing well in excess of non-OPEC supply, overriding concerns of potential supply disruptions driven by political developments in the Middle East.
Fears of instability in Egypt could spread through the Middle East -- which, together with North Africa, extracts over a third of the world's oil -- have sent Brent crude prices near $100 per barrel. [ID:nLDE70U00B]
Goldman said the impact of the unrest in Egypt and Tunisia -- neither of which are major oil exporters -- was overstated.
"Global oil demand-driven oil price increases are more likely to result in higher equity valuations than supply disruption-driven oil price increases," it said in a note.
"A potential disruption to oil supply would likely favor energy equities in the short-term," Goldman said.
The brokerage said the global oil demand is resulting in a steady decline in inventories and OPEC spare capacity, leading it back its base-case price deck for West Texas Intermediate spot oil at $100 per barrel for 2011 and $110 for 2012.
U.S. benchmark crude CLc1 has risen 4 percent in the last seven days, since the unrest in Egypt heightened. (Reporting by Swetha Gopinath in Bangalore; Editing by Joyjeet Das)