Oil prices at US$100 a barrel are no longer an unthinkable prospect in the aftermath of Hurricane Katrina, and Asian demand is part of the reason, analysts said.
Predictions by US investment bank Goldman Sachs in March that oil prices could race upwards to US$105 a barrel were widely ridiculed, but the damage unleashed by the US storm has made others now consider it a possibility.
Sceptics say oil prices are becoming a bubble just waiting to burst after striking a record high of US$70.85 a barrel last week as Katrina hit oil-producing and refining areas in the southern US, and there appears to be relief in the short term.
World prices
World oil prices retreated from US$70 territory on Friday when the US government led a drive by major industrial powers to release emergency supplies of crude. New York's main contract, light sweet crude for delivery in October, fell US$1.90 to close at US$67.57 a barrel.
Asian Development Bank president Haruhiko Kuroda said in Singapore on Friday that "I don't think US$70 will be maintained, but how much and when prices start to decline no one knows."
"There's a great uncertainty that exists," he said.
Travel expert John Koldowski, managing director of the Strategic Intelligence Center at the Pacific Asia Travel Association in Bangkok, said the industry was taking "a long hard look" at what is going on in the oil sector.
Analysts had dismissed speculation of US$100 dollar oil a few months back but "we're really now starting to take it seriously," he said.
"It's a whole new ballgame for us. We're now talking about prolonged levels of relatively high oil prices," Koldowski said.
Some analysts say that with refineries in the US Gulf Coast hammered by Katrina, all that is needed to push prices up to US$100 is a terrorist attack or labor strike in one of the major oil-producing nations.
Supply disruptions
"If we have supply disruptions in Saudi Arabia, Iraq or Venezuela or Nigeria, then it could be even worse," said Tony Nunan, manager for energy risk management with Mitsubishi Corp's international petroleum business in Tokyo.
"We could easily have a bigger problem if this sort of thing [labor strike] or terrorist attack occurs in a major oil producing country now ... prices will shoot up to three-digit figures," he said.
Saudi Arabia, the world's biggest crude producer which holds the largest proven oil reserves of 261.2 billion barrels or more than a quarter of the global total, has been rocked by a spate of bloody attacks attributed to Al-Qaeda militants in the past two years.
Analysts have consistently warned any disruption to Saudi Arabia's production facilities would send shockwaves as it is the only oil-producing country believed to have the spare capacity to raise output.
"The geopolitical situation in oil producing countries like Nigeria and Iraq is certainly less stable than we would like," said Deborah White, a senior energy analyst with French bank Societe Generale in Paris.
Nervousness
"It keeps nervousness and prices high," she said.
Oil prices have risen by more than 50 percent since the end of last year when they were trading at around US$43 a barrel.
The sharp spike in oil prices is attributed mainly to the world's growing thirst for black gold, with the sizzling Chinese economy and strong US consumer demand singled out as the major demand drivers.
A pressing worry now is how much damage has been inflicted on US refineries in the Gulf of Mexico region, which accounts for a quarter of the country's total oil output.
As of Saturday, more than 88 percent of daily Gulf crude production was shut down and nearly 79 percent of natural gas output was halted. That was an improvement on Thursday's 91 percent for crude and 83 for gas.
The Department of Energy said on Saturday that one refinery in Louisiana was restarting but eight others in the area remained shut down as a result of the hurricane.
Combined, the nine refineries' production capacity is 1.83 million barrels of oil a day -- about 10 percent of total US output.
"We have yet to find out how much damage Katrina has caused," White said.
"At the moment, we are at the mercy of the weather ... the worst is that the hurricane season is not over," she said.
Hurricane season
The Atlantic hurricane season runs from June to November and the US National Oceanic and Atmospheric Administration had warned last month that seven to nine more hurricanes could form this year, mainly threatening Caribbean islands and the US southern coast.
"The season is still another three months ... we still have a long way to go," Nunan said. "If we have another hurricane in the same area, it will be a total panic for the oil market."
While the prospect of oil prices touching the three-figure zone cannot be ruled out, analysts doubt a price at that level could be sustained as it would deal a psychological blow to consumers everywhere.
A three-digit crude oil price would be "enough to get everybody, politicians, economists and the average person on the street jumping up and down and cutting back on spending and driving," Nunan said.
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