The Middle East continues to be a concern affecting global crude oil prices. If crude oil continues to be above USD 100 a barrel, the government could take action in the form of raising prices of petrol products or even seeing the import bill go up. Jason Feer, Vice President and Singapore Bureau Chief of Argus Media told CNBC-TV18 that if the contagion spreads to the neighbouring countries surrounding Libya, these additional disruptions could see crude oil prices heading even higher. “An upward impact of oil is likely if these tensions move, especially, towards Saudi Arabia,” he says. Below is a verbatim transcript of Jason Feer’s interview with CNBC-TV18’s Latha Venkatesh and Ekta Batra. For complete details watch the accompanying video. Q: How long do you see crude remaining at these elevated levels? Is this going to be a one quarter phenomenon or even longer than that? A: It really depends on how long the situation in Libya remains uncertain and that to be honest is looking worse and worse. It will probably, be a pretty protracted situation. It is also possible we could see more and more oil production coming off line in Libya as the fighting swings back and forth. The other question is whether this spreads to any other oil producing nation. Algeria has been a country that a lot of analysts have been talking about and if you saw political instability in any other oil producing country that might threaten output then you could see prices moving even higher. Q: Is this fear more in terms of the political turmoil spreading to the other countries, this expectation of a prolonged conflict that keeps crude where it is. If that is the fear and if you don't see too much of turmoil coming out of say, Saudi Arabia or Algeria, do you think that this fades out by say April or May or do you think that doesn't happen? A: Libyan oil tends to be fairly sweet and fairly light, that means Libyan oil is very well priced for middle distillates and gasoline etc. What Saudi Arabia is putting out in the market is much heavier and much more sour and there aren't as many refineries that can run that. There is a bit of a mismatch between what Saudi Arabia is offering and what the market wants. That is part of the reason you haven't seen much of a reaction from the market. The issue is about half of Libyan oil is off the market now, but Gaddafi has been bombing some of the oil-hubs held by the rebels and that could have an impact of pulling even more crude off the market, overtime. Q: We have seen crude or rather Brent spike up a percent possibly in a couple of hours this morning itself. There are concerns that Libya might now develop into a full-fledged civil war? What sort of estimates it could possibly have if there is a prolonged tension occurring in Libya? A: You have seen sort of half their production come off line and what that has done is it has pushed oil up 20-25%. Additional disruption at this point could also push it up. That sort of sweet-light impact from Libya is having a particularly dramatic effect on Brent, which is also a lighter-sweeter grade. That is the kind of dynamics we are getting. If things get worse in Libya or if you start to see unrest in places like Saudi Arabia or Algeria, then that can have a very significant impact. Q: Do you see crude getting back to USD 100 per barrel levels anytime in say the next two months? A: It very much depends on the political situation. If there is a speedy resolution to the situation in Libya and no additional problems in any other oil producing countries then the fundamentals would dictate. You would see in terms of supply and demand. All things being equal there is plenty of crude in the world. But at this point, it is almost entirely dependent on politics and the stability of the various oil producing countries. Q: If you have to bet whether crude goes to a USD 110 or USD 100 per barrel next, what would your bet be? A: I try not to be a betting man but I guess most of the pressure at this point is certainly on the upside. I probably would have to take a USD 110 per barrel. Q: How would you read comments coming in from President Obama about possibly releasing some amount of emergency oil stock piles to ease supply concerns etc. Is that pertinent at all? A: To be honest, I think that is more of an attempt to calm the market and send the signal that if things get worse, the Organization for Economic Cooperation and Development (OECD) will step in with more crude in the markets. The problem with that is, the US and the OECD countries that hold strategic stocks have an agreement to operate cooperatively. There is really no shortage of crude at this point; this is just a sort of a pricing question. The US putting a bit of crude into the market, probably, won’t make much of a difference. Obama would have to have support from the European nations and the OECD countries in Asia like Korea and Japan. I don't see a lot of support building at this point for a move like that.

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