(EnergyAsia, February 6 2013, Wednesday) — World oil prices are likely to hold up in coming months on rising global demand, continuing geopolitical threats to supply and monetary easing in most major economies.

As an indication, prices held up last year despite facing some of the most bearish economic conditions in recent decades. Brent crude oil prices closed at a record average US$116.5 per barrel last year while US benchmark WTI traded at US$94.12, according to the US Energy Information Administration (EIA).

With the US economy in slow recovery, Europe seemingly near its trough, and China regaining its momentum, oil prices have started 2013 on an upward trend. At the close of January, Brent was edging towards US$115 while WTI was wound up to test US$100 again.

Forecasts for the US to become a major oil producer and net exporter ignore the reality that the data includes a large component of natural gas liquids and unconventional hydrocarbons that contain less energy compared with conventional oil.

Last month’s terror attack on the Ain Amenas gas facility in Algeria, Africa’s largest natural gas producer, the spreading colonial war in North Africa and the declining political stability of the Middle East present a significant and permanent threat to the world’s oil and gas supplies.

A total of 55 people including 32 workers have been reported killed over the course of a four-day hostage crisis in Algeria that ended when security forces battled terrorists who had seized a BP-operated natural gas plant at Ain Amenas in the eastern central part of the country.

Buoyed by the success of their Ain Amenas raid, terror groups are reported to be looking to attack Libya’s oil facilities recently restored after the 2011 civil war to overthrow the Gaddafi regime. Iraq continues to experience bombings and sectarian violence while Israel is still preparing to attack Iran.

The increase in US oil production will not be sufficient to overcome the loss of such supplies in the event of a worsening of military conflict together with the declining export surplus from Saudi Arabia.

According to US consulting group PIRA, monetary easing across the world and continuing economic growth will add to the oil market’s bullishness this year.

The company expects tighter market balances in the first half along with “huge” OPEC and non-OPEC supply losses will offset the impact of large increases in North American production.

Full details of this story is available in the February issue of EnergyAsia Report.