With the threat of air strikes hanging over Syria and turmoil raging across the Middle East, oil is up and stocks are down. That is a predictable and rational reaction to uncertainty. The price of a barrel of Brent crude oil is 15 per cent higher over three months, with a sharp rise in the past few days. The world is captivated by both the horrors in Syria and the paralysis in Egypt. Yet the country the oil market really ought to worry about is Libya.

Syria always has been and always will be a marginal player in the oil market. Before the civil war, it produced about 370,000 barrels of oil equivalent a day; that may have fallen to about 70,000 b/d now. Nor is it a significant transit point. A western military strike there would undoubtedly have a financial impact – Société Générale estimates that it could push the oil price up to $125 from about $117 yesterday. But that ought to be shortlived, unless there is widespread contagion across the region, which is unlikely.

More troubling is Libya, which produced almost 2 per cent of the world’s total oil and gas output last year. Earlier this year, the country was boasting that it was almost back to its prewar production level of about 1.6m b/d (of which 1.3m b/d is exported). But strikes and protests have cut its daily oil production to an average of just 500,000 b/d this month. The chaos that has gripped Libya since the ousting of Muammer Gaddafi in 2011 now threatens to curtail production indefinitely.