Libya still a bigger risk to oil than Syria: Credit Suisse

Leon Neal | AFP | Getty Images

An oil refinery in Zawiya, Libya.

"Real" supply shortages from Libya pose a greater immediate risk to oil markets than the threat of military action against Syria, Credit Suisse commodity analysts argued.

"Whereas Syria has little production to lose, Libyan instability is causing an acute supply disruption," Jan Stuart and Johannes Van Der Tuin wrote in the report on Tuesday.

(Read more: Brent may hit $150 if Syria impacts Iraq, SocGen warns)

Brent crude futures surged to a six-month high on Tuesday, reflecting fears that punitive air strikes against Bashar Al-Assad's government may be days away after the regime allegedly used chemical weapons last week in an attack on a Damascus suburb.

Syria was a secondary factor behind oil's surge yesterday, which Credit Suisse saw as chiefly driven by "the likely prolonged absence of more than 1.0 million barrels per day of Libyan oil exports."

(Read more: US strike against Syria 'as early as Thursday')

U.S.-led strikes against Syria are unlikely to have a direct effect on the oil supply and demand balance since Syria produces minimal volumes of oil.

Pre–2011, Syria only produced about 385,000 barrels a day of liquids, "which have essentially been offline since the conflict began," Stuart and Van Der Tuin said.

In contrast, protests by security guards and oil workers over pay and other political demands have shut several major Libyan oil export terminals and oilfields bringing total Libyan oil output to less than 200,000 barrels a day from pre-war levels of around 1.6 million, according to Reuters, the worst disruption since the civil war in 2011.

'Speculative pop'

Labor disputes have been "metastasizing" in Libya and are "manifestations of greater social instability," Credit Suisse said, agreeing daily Libyan production was as low as 200,000 barrels.

Libya's largest western oilfields closed when an armed group shut down the pipeline linking them to ports, its deputy oil minister said on Tuesday, reducing its oil output to a trickle, Reuters reported.

(Read more: Is a spike in oil prices around the corner?)

Credit Suisse didn't rule out a "speculative pop" in the benchmark oil prices in the immediate aftermath of any military action against Syria though any such move is likely to be fleeting.

"However, if the Assad regime or its allies decided to widen the conflict, in response to U.S.-led military actions, the oil market impact could be greater," the analysts said.

Some commentators are speculating that Russia, a major Syrian backer, may halt oil exports in response or that Iranian-trained and funded Lebanese Shi'ite militant group Hezbollah, which has sent fighters into Syria to help the government there, may strike targets in Israel.

(Read more: Oil prices seen higher but shock not yet in the cards)

The Turkish port of Ceyhan, the terminus of the 1 million barrel a day Baku-Tbilisi-Ceyhan pipeline located 50 miles from the Syrian border, ranks as one of the close-proximity strategic assets that may be targeted should retaliation happen, Credit Suisse said.

"We do not see any such widening as likely, given that it does not appear to be in the Assad regime's interest to antagonize further their more militarily powerful neighbors."