Awwal 21, 1432 H/Feb 24, 2011, SPA -- Major banks warned on Thursday an output loss from another oil producer after Libya would lead to global shortages and demand rationing and said OPEC needs to act quickly as the oil rally could derail economic recovery, Reuters reported. Goldman Sachs issued a note saying the world would not be able to cope with another Libya-style oil production outage as Brent oil prices rallied by over $8.50 a barrel to near $120 a barrel. Italian oil firm ENI, a key Libyan oil player, said the OPEC member had lost three quarters of its production. "This makes the risks now associated with further contagion much higher than they were several days ago as further disruptions could now create severe shortages in global oil markets that would require substantial demand rationing," Goldman Sachs analyst Jeffrey Currie said. Barclays Capital and Citi said it saw no downward pressure on prices until more oil comes to the market. "Unless we see an explicit move from ... producer countries, i.e. Saudi Arabia, I don't think there is necessarily going to be any downward pressure on (oil) prices," said BarCap analyst Amrita Sen. Mark Fletcher from Citi agreed that OPEC leader Saudi Arabia needed to take action within weeks. "To date we have had a lot of words from Saudi Arabia ... but they haven't done anything yet and we need to see that action." Saudi sources said on Thursday the kingdom, the only nation in the world with large spare capacity, was able to plug any oil supply gap and had the capacity to pump all types of oil, including the light oil produced by Libya OPEC is estimated to have spare capacity of 4-6 million barrels per day, while Libya produces 1.6 million. -- SPA
