If the world calls, will Saudi be there?

Let’s say that Libya’s entire oil production shuts down, a process that currently seems under way. Would Saudi Arabia genuinely make up the difference, as its energy minister, Ali al-Naimi (pictured above), has said in Riyadh? The answer is crucial — everyone from the presidents of the world’s leading industrial nations to the CEOs of the Fortune 500 to Wall Street expects Naimi to step up to the plate with Saudi’s 4 million barrels a day of excess production capacity should there be an oil shortage. It’s not an exaggeration to say that the global economy relies on this presumption.

Yet, not everyone thinks the answer is as pat as the conventional wisdom suggests. For instance, in its overnight note to clients, Cameron Hanover, an energy analysis firm, cast doubt on Saudi Arabia’s ability to keep the market supplied:

OPEC, namely Saudi Arabia, pledged to make up any oil lost from Libya, which exports around 1.6 million barrels of oil per day. Of course, that only works as long as Saudi Arabia avoids contagion. And we have not read of contagion ever spreading with greater speed than has been seen these last few weeks. The spread has rivaled the spread of the Black Plague 650 years ago. That very speed may be the factor that has oil markets most on edge.

So now we come to where the rubber hits the road with the turmoil in the Middle East: Just what is the risk of the entire global economy going south, which is what would happen if the Saudis couldn’t compensate for a global oil deficit as they have done in the past?

Reuters called a Saudi oil disruption "unthinkable," and in his remarks yesterday, the long-reigning al-Naimi demonstrated that he still has the power to move markets as Brent benchmark crude rose just 4 cents for the day. Even if the Saudis had a bit of trouble, Michael Levi suggests that the world can plan ahead and make up the difference since it has so much in the way of stored-up reserves.

Yet the risk of that not being the case is the context of the turmoil currently under way in global markets — the thought that, say, 5 percent or so of daily oil supply, meaning 4 or 5 million barrels of oil, abruptly is no longer available for purchase, and the Saudis are no longer there to save the day. In a single word, there would be pandemonium.

So where are we now? The Financial Times’ Javier Blas and David Blair report that about 350,000 barrels a day, or 22 percent, of Libya’s 1.6 million barrels a day of production is now off line:

Repsol said on Tuesday it had shut down the massive El Sharara oilfield, with around 250,000 barrels a day of production. Repsol operates the field but its share of production is just 35,000 b/d. The bulk of the rest will affect Libya’s state-owned National Oil Company. Germany’s BASF shut down a 100,000 b/d of production in Libya on Monday.

The world currently is awash in oil, and Libya’s missing volumes won’t halt anyone’s factory or vehicle. But if the oil flow becomes cut off from additional petro-states, what will happen? At Fortune, Colin Barr points out that Saudi’s long-term rising consumption raises questions about its capacity for rescuing the world economy down the road.

But that is not the question. Instead, given the unpredictability of the Middle East turmoil, it’s that the world is looking square in the face of a short-term question as well.