Incessant speculation over possible military action against Iran has kept crude oil prices firmly above $100 per barrel, Global Investment House said in a recent study. Oil prices increased by 2.6 percent to $105.11 per barrel during the review period (16 Feb 2012-15 March 2012). Iran's decision to halt oil supplies to Britain and France as a pre-emptive measure ahead of European Union plan to stop importing oil from Iran from July 2012, has put further upward pressure on crude oil prices. Meanwhile, headways made in European debt crisis have also helped to boost oil prices. Greece is undergoing the largest sovereign debt restructuring ever. The private creditors have agreed on the bond swap deal which has cleared the way for the $160 bilion bailout. In a further sign of improvement in sentiments, the Italian 10-year bond yields have come down to 4.89 percent compared to 7.26 percent in November 2011. Positive news has also emanated from other side of the Atlantic with US economy creating 227,000 jobs in February. The US economy has added around 734,000 jobs in the three months till February which has pushed down the unemployment rate to 8.3 percent. Oil production has been on the rise since 3Q11 after unrest in Libya resulted in decline in production in 2Q11. OPEC production (ex-Iraq) has reached 28.3 million bpd in February 2012 compared to 26.5 million bpd in 2Q11, an increase of 6.8 percent during the period. With oil prices hovering at high levels, there is always an incentive for oil producers to increase their production to maximize revenues. However, this time around most of the increase has been due to faster than expected recovery in Libya oil production which has contributed around 58.0 percent to the overall growth during this period. Oil prices fell Tuesday after Saudi Arabia repeated its pledge to make up for lost Iranian output, easing supply concerns according to analysts. Brent North Sea crude for delivery in May slid $1.58 to $124.13 a barrel in London. New York's main contract, West Texas Intermediate crude for April, shed 88 cents to $107.21 a barrel. The Saudi cabinet Monday released a statement vowing to "ensure adequate oil supply, stabilize the oil market and bring down oil prices to reasonable levels to both producers, consumers, and the petroleum industry." Saudi oil minister Ali Al-Naimi said last week that the Kingdom stood ready to cover any shortfalls of supplies in the market. The assurances from Saudi Arabia come as the international community ramps up sanctions on Iran. Going forward, "we expect OPEC oil production to stay at least at these levels if not increase further. A decline in Iranian exports and consequentially its production is likely to be made up by other OPEC members especially Libya as its oil production recovers further," Global Investment House study further said. Oil production has been on the rise since 3Q11 after unrest in Libya resulted in decline in production in 2Q11. OPEC oil production has reached 28.3 million bpd in February 2012 compared to 26.5mnbpd in 2Q11, an increase of 6.8 percent during the period. With oil prices hovering at high levels there is always an incentive for oil producers to increase their production to maximize revenues. However, this time around most of the increase has been due to faster than expected recovery in Libya oil production which has contributed around 58.0 percent to the overall growth during this period. In addition Saudi Arabia which jacked up its production to make up for the shortfall has kept its production at high levels. The study forecast that production in Libya to increase further and move closer to the pre-revolution production levels of 1.55mnbpd. On the contrary, Iran production is likely to get affected as sanctions take a bite on its exports. Meanwhile Nigeria saw protests and strikes after it abolished fuel subsidies. Saudi Arabia, will have to play a fine balancing act, the study pointed out. Non-OPEC supply growth slowed down drastically to 0.03mnbpd in 2011 after a strong increase of 1.13 million bpd in 2010. The slow growth was due to delayed ramp-up in some fields, unplanned shutdowns, adverse weather and political problems in countries such as Yemen and Syria. North America has been the major source of non-OPEC supply increase while Western Europe has seen the largest decline in its production. Oil supply increased by 0.03 million bpd in 2011 which is far lower than an increase of 0.41mnbpd estimated at the start of the year. This lower than expected increase in non-OPEC oil supply goes some distance to explain the high oil prices in 2011 despite the economic uncertainty in the backdrop of the European debt crisis, Global Investment House added. World oil demand continued to recover, though at a slower pace. World oil demand increased by 0.9 million bpd in 2011 after a strong increase of 1.6 million bpd in 2010. European sovereign debt crisis, Arab Spring and Earthquake in Japan were the major factors which kept a lid on world oil demand growth. The recovery in 2011 and 2010 came after a steep decline in 2009 by 1.4 million bpd and a slight decline in 2008. The decline in 2008 was the first decline in oil demand since 1983 reflecting the impact of the global financial crisis and the ensuing recession. The global financial system is going through turbulence with debt crisis in Europe taking a centre stage. The impact of the crisis manifested itself in the Western Europe oil demand which decreased by 0.16 million bpd. Many European countries are adopting austerity measures to bring fiscal stability. Moreover, the report said world oil demand is expected to have increase by 0.95 percent to 87.7 million bpd in 2011. This is significantly lower than 1.43 percent growth expected by OPEC at the start of the year. However, this lower demand was offset by lower non-OPEC supply, it added. Bulk of the world oil demand growth is expected to have come from China. With the Chinese economy growing at 9.2 percent in 2011, it was no surprise that contributed around 55.0 percent to the overall world oil demand growth, the report noted.