Oil roil: Why 2011 is not 1973

Global oil markets, naturally, remain focused on the latest events in Libya (rebels have been shaken by airstrikes, forces loyal to Gaddafi have surrounded the city of Zawiyah while NATO is weighing its military options).

Brent crude oil futures for April rose about a dollar in early trading today, to about $114 per barrel. That's down from a peak of $120 reached on Feb. 24.

Oil traders are also watching Saudi Arabia closely, both for hints about whether the kingdom can keep pumping additional OPEC supply into the market, and for signs that political unrest will spread there, too (another "Day of Rage" is planned for Friday).

For a deeper dive on all this check out this typically brainy piece from the Economist about some of the key underlying factors now driving the global oil markets.

In short, it argues that turmoil on global oil markets has — throughout recent history —spelled trouble for the global economy.

For those of you old enough to remember, the darkest example is the Arab oil embargo of 1973, which induced severe economic pain and sparked panic at gas stations across the United States.

But 2011 is not 1973. Here's why, the Economist argues:

"Libya’s turmoil has reduced global oil output by a mere 1 percent. In 1973 the figure was around 7.5 percent. Today’s oil market also has plenty of buffers. Governments have stockpiles, which they didn’t in 1973. Commercial oil stocks are more ample than they were when prices peaked in 2008. Saudi Arabia, the central bank of the oil market, technically has enough spare capacity to replace Libya, Algeria and a clutch of other small producers. And the Saudis have made clear that they are willing to pump."

Of course, more violence could create greater oil price spikes (no markets like uncertainty). And in 1973 China was still a third-world backwater, not the oil-sucking economic giant that it is today, so spare capacity is pretty sparse.

As for the impact of oil's roil on global economic growth?

The answer is, well, it depends.

Final word goes to the Economist:

"A rule of thumb is that a 10 percent increase in the price of oil will cut a quarter of a percentage point off global growth. With the world economy currently growing at 4.5 percent, that suggests the oil price would need to leap, probably above its 2008 peak of almost $150 a barrel, to fell the recovery. But even a smaller increase would sap growth and raise inflation."

Feeling better yet?