RIYADH: Driven by geopolitics, oil price shock seems just round the corner. Supply disruptions are starting to weigh in. US Energy Information Administration reported last month that global supply disruptions reached 2.7 million barrels per day (bpd) in July. And analysts now say these outages have in fact risen since then.

Geopolitical situation in the Middle East, accounting for 35pc of the global crude production, is one major influence on the crude markets.

News emanating from the oil rich region is disturbing. Libya’s oil output has crashed to a near standstill, falling from 1.4 million bpd to just 250,000 bpd after protesters shut oilfields and export ports.

“We are currently witnessing the collapse of state in Libya, and the country is getting closer to local wars for oil revenues,” said the Swiss-based group Petromatrix. Production has also slumped in Iraq, Nigeria, Iran, Yemen and Syria itself, each for different reasons. This has cut daily global supply by 1.1m bpd over the past year.

Bank of America says the “global shortfall” in oil has reached 4m bpd and leaves the world extremely vulnerable to a supply crunch if any missile strike in Syria goes wrong.

The warning follows a disturbing report by Societe Generale’s Michael Wittner, a former oil analyst for the US Central Intelligence Agency.

Wittner predicts a rise in oil prices to $150 if the missile strikes lead to a regional spillover, citing retaliatory attacks by Iran on Iraqi oil supply lines as the chief risk.

“Our big worry is Iraq,” he said.

“Iraq is close to civil war,” said Jardine’s Dr Stephens. “Pipelines keep being blown up by Al Qaeda and other militants.”

Iraq’s output has slipped to 2.9m bpd from 3.2m bpd in April far short of expected levels.

Nigeria’s output too has slumped to 1.9 million bpd from 2.5m bpd over the past year, while scheduled rig maintenance is to shave a further 500,000 bpd off output in the North Sea and Canada. United Nations sanctions against Iran have drastically reduced Iranian oil exports too by 1.2m bpd as per some estimates.

And the ongoing crisis in Egypt and developments in Syria are destabilising the crude markets deeply. Washington now seems to be reconciled to the proposition that the Asad regime was behind chemical attacks on citizens and that it has to be held accountable. But any (mis)adventure against Asad has the potential of shaking the entire oil rich belt. “The concern is that an attack on Syria will reverberate through the region, increasing the spill over into other countries and possibly resulting in a larger supply disruption elsewhere,” Wittner, underlined.

Simultaneous turbulent politics to the south in Egypt could also threaten global supply, as Egypt hangs in an unresolved state of emergency, fanning fears Suez Canal operations could be disrupted.

Republican Senator John McCain is perturbed at the prospect. “There are economic impacts if this conflict continues to spiral out beyond the borders of Syria. Those who think we can contain this within Syria, frankly that’s just not what’s happening in that part of the world.”

Brent crude surged to a six-month high last Wednesday, while the US benchmark held near its highest level since early 2011, as Washington geared up to attack Syria. But the upward march got stalled, after Britain’s parliament defeated a proposal by Prime Minister David Cameron that could have led to UK involvement in a military attack on Syria. Prices slipped below $115 as a result.

With the oil rich region literally on fire crude sentiments are getting bullish with each passing day. Efforts are being made to stabilise the markets. Yet despite the reported opening of taps by Riyadh, to 10.5 million bpd of crude in the third quarter a million bpd over second quarter and its highest quarterly output ever, global economy could still be faced with strong headwinds in the coming days. Courtesy geopolitics smooth sailing is no more a norm.