DUBAI As Libya's embattled leader pelts rebel strongholds with bombs near the country's coastal oil export hubs, the risk of long-term damage to the OPEC country's oil industry is rising.
Libya's battle lines are shifting daily, with rebels in tenuous control of the east, but the fighting is increasingly taking place near oil industry infrastructure on the coast.
Since unrest began weeks ago in the North African country, which typically pumps around 1.6 million barrels a day (bpd), around 750,000 bpd has been shut in as workers flee.
The disruptions helped push Brent crude prices to 30-month highs this week near $118 a barrel. But so far, the conflict has spared Libya's oil infrastructure, including its key export terminals, pipelines and well equipment, worth billions.
As the stand-off devolves into what looks increasingly like a civil war, oil experts and analysts are seeing an increasing risk of long-lasting damage to Libya's largely foreign-run oil sector, which could keep oil prices high for a long time.
The stakes are clear. Libya holds Africa's largest oil reserves, and crude shipments account for 95 percent of its export revenues. Neither Gaddafi nor rebels want to see the spoils fall into enemy hands. European refiners, especially in Italy, rely heavily on Libya's prized light crude.
But both the Gaddafi regime and rebels have said publicly they will not seek to destroy oil infrastructure.
No damage to oil infrastructure was reported Wednesday and Thursday, when Gaddafi-loyal air force fighters attacked oil export hub town Brega. The town, currently in rebel hands, has passed back and forth between regime and rebel control in recent days.
ABANDONED AMID THE FIGHTING
"It has become likely that Libyan fighting will affect, and potentially destroy, oil infrastructure serving the country's largest, central Sirte basin, which is right on the fault line between Gaddafi loyalists and rebels," said Samuel Ciszuk, Middle East analyst at IHS Energy in London.
Gaddafi loyalists, who briefly captured Brega Wednesday, have since been repelled back to Ras Lanuf, another major oil terminal 600 km (375 miles) east of capital Tripoli.
"Libya's oil infrastructure hasn't been damaged. But the risk of damage is increasing, and that could make it harder for Libya to resume oil supplies any time soon," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
And after thousands of foreign oil workers have fled the country, concerns about oilfield maintenance in the remote interior are also rising.
"There are really two big concerns," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
"Over the course of a shutdown of production to evacuate staff, wells have to be handled very carefully. It's not like turning a light bulb off and on again. The other concern is that we will see facilities affected by the fighting."
The Sirte basin holds reservoirs with over 43 billion barrels of oil, which are tapped from both east and west, but it's at risk of being cleaved down the middle.
A trunk pipeline supplies oil flows that end up both in Ras Lanuf, still under Gaddafi's control, and terminals further east which are run by AGOCO, a unit of the state-run National Oil Company that is now under the control of anti-Gaddafi engineers, Ciszuk said.
AGOCO typically ships up to 450,000 bpd. Reports in recent days have shown tankers are still leaving Libya, but it's not entirely clear who gets the revenue, Gaddafi or rebels.
Digging in its heels, AGOCO has said it may start its own marketing division to negotiate with foreign buyers.
Gaddafi-aligned oil minister Shokri Ganem, meanwhile, has claimed Libya's oil sector remains firmly under regime control.