(EnergyAsia, May 26 2010, Wednesday) — The huge loss of oil from a ruptured well by BP in the Gulf of Mexico has not affected crude oil prices yet because of the surplus inventory in the US and Europe, and concerns over Europe’s slumping economy.

Weak oil demand in the West is weighing heavily on the global markets more than fears that regulators and environmental groups may soon restrict offshore oil and gas exploration and production.

Crude oil futures have fallen to a 10-month low of US$68 a barrel from more than US$87 a barrel in late April.

Prices could yet recover if the leaked oil spreads and starts interrupting shipping lanes and causing shutdowns of other producing fields.

Meanwhile, the International Energy Agency (IEA) has warned governments against over-tightening  regulations that could end up constraining future exploration and development. The resulting higher cost of compliance would inevitably lead to higher oil prices.