Since the revolutionary spirit started spreading to Libya, markets have been very nervous about oil.
The official line has been that there's c. 5 million barrels of spare capacity within OPEC, so even if the whole of Libya production went offline, it would not cause a crisis.
And from that the discussion has exploded to all directions mainly from people who do not have an inkling of an idea what the supply/demand issue is.
So, Steve Kopits (Douglas-Westwood consulting) to the rescue. He sums up the situation in this one slide of his recent 'Oil, The Economy, and Policy' presentation:
So, there you have it. Oil shock by end of 2012 or shortly thereafter. Even if Libya and the rest of the Arab nations keep producing with very little hiccups.