The International Energy Agency confirmed on Friday that Saudi Arabia was stepping in to cover the fact that many platforms producing high-grade oil from Libya have been completely shut down because of the unrest.
A source told Reuters that the Saudi state oil company increased its production to more than 9m barrels per day – a rise of more than 700,000 barrels.
The worsening situation in Libya has seen about 1.2m barrels of production out of Libya's 1.6m barrels daily output lost.
European refineries have been particularly worried about a shortage of high-grade crude, of which Libya is a key supplier.
However, the news of Saudi Arabia's intervention calmed the spot price of oil, which had risen to a two-and-a-half year high above $119 at one point on Thursday.
On Friday, Brent crude dropped down to $111 per barrel. However, it still closed up 9pc for the week, reflecting continuing unrest in the wider oil producing region. Riots have spread from Tunisia to Algeria, Egypt, Bahrain and Yemen in recent weeks.
Analysts from ICAP Shipping said on Friday: "In terms of pure volumes there are ample supplies of crude that can be brought to the market if there is a major and prolonged disruption of exports [from Libya].
"However, with the lion's hare of Libyan crude comprised of light, sweet grades, it is also not entirely clear how global trade flows will be affected."
IEA figures show that Saudi Arabia has 3.5m barrels a day of spare capacity, while the United Arab Emirates could add 330,000 barrels, Qatar could put on 180,000, and Kuwait 230,000. While not all of this would be likely to come on stream at once, Middle East production is still 1.7m barrels per day lower than it was at the height oil price spike in mid-2008.
Analysts from ICAP Shipping said on Friday: "In terms of pure volumes there are ample supplies of crude that can be brought to the market if there is a major and prolonged disruption of exports [from Libya].
"However, with the lion's hare of Libyan crude comprised of light, sweet grades, it is also not entirely clear how global trade flows will be affected."
IEA figures show that Saudi Arabia has 3.5m barrels a day of spare capacity, while the United Arab Emirates could add 330,000 barrels, Qatar could put on 180,000, and Kuwait 230,000. While not all of this would be likely to come on stream at once, Middle East production is still 1.7m barrels per day lower than it was at the height oil price spike in mid-2008.
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