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.
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