"The market has undeniably become tense and it will remain that way. Nevertheless, until now supplies from the Middle East have not really been disrupted by geopolitical events," IFP President Olivier Appert said.

"If oil exports from this region are disrupted in the future due to political tensions, we could find ourselves facing a real oil shock," he added, presenting the institute's analysis of the oil markets in 2004.

Spare production capacity in the Organisation of the Petroleum Exporting Countries last year shrunk to less than two million barrels per day, the lowest since the 1970s oil shocks, as output was hiked by four million bpd over the last two years, levels not seen since 1988/1989, the IFP said.

"In these conditions, the accumulation of political disturbances in Iraq, Nigeria, Saudi Arabia and other factors like the hurricanes in the Gulf of Mexico, posed a threat to the continuity of supplies," Appert said.

Oil prices hit a record high of $55.67 a barrel last October after surging on blistering demand growth that pushed global production to its limit and sparked fears of a winter fuel supply crunch.

Appert said the market was extremely tense as demand continued to soar to over 82 million bpd, led by growth in China, refinery capacity became saturated, and crude oil and product stocks dwindled.