DUBAI, United Arab Emirates (Reuters)—Unrest sweeping the Middle East could squeeze OPEC's precious near-term and long-term spare oil capacity as fearful governments delay reforms needed to tame galloping domestic fuel use.

The disruption of much of Libya's 1.6 million barrels per day of production already threatens to make a serious dent in the less than 5 million barrels per day of OPEC oil that can be added swiftly to markets in times of shortage.

Saudi Arabia, the world's leading exporter, with total capacity of around 12.5 million barrels per day, holds the bulk of the world's spare capacity—defined as oil that can be brought onstream within 30 days and sustained for 90 days.

A senior Saudi source said Monday that it was producing about 9 million barrels per day and still had roughly 3.5 million barrels per day on hand. The kingdom also has insisted that the amount includes the kind of light, easy-to-refine oil that Libya ships chiefly to Europe.

Not everyone is convinced.

One factor behind a spike in crude prices to nearly $120 a barrel last week was a report by Goldman Sachs Group Inc. that Libyan disruption could absorb as much as half of OPEC's spare capacity.

Until the upheaval in Libya, many had drawn a contrast between price strength that had already taken crude to around $100 a barrel early this year and the record rally of 2008 to nearly $150, when spare capacity was less than 2 million barrels per day.

Some analysts now see more similarities than differences as OPEC's spare oil margin dips below the level of 5%—roughly 5 million barrels per day—of global demand that analysts view as comfortable.

The International Energy Agency has predicted that oil demand will rise to a record of more than 90 million barrels per day by year-end.

Field maintenance, meanwhile, could temporarily choke off capacity.

“We've seen they've approved a budget for very deep maintenance for their (Saudi's) fields, so the maximum spare capacity during that maintenance could fall around 500,000 (barrels per day) at various times,” said David Kirsch, director of market intelligence services at consultancy PFC Energy in Washington.

Further in the future, the problem could be rising domestic use, which Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have long been hoping to restrain by cutting subsidies and raising fuel prices.

“One of the biggest victims in this unrest is the drive to lower subsidies. Nobody will dare to do that now,” said Samuel Ciszuk, senior Middle East and North Africa energy analyst at IHS Global Insight.

A wave of popular revolt has toppled Tunisia's and Egypt's presidents, left Libyan leader Moammar Gadhafi clinging to power and inspired protest in Saudi's neighbor, Bahrain.

Saudi King Abdullah's response has been to announce benefits for Saudis worth some $37 billion.

One analyst, speaking on condition of anonymity, said the measures would serve to drive consumption— “hence additional demand on power generation, hence a bigger strain on its crude production and oil products,” he said.

Saudi oil industry figures seen by Reuters showed the kingdom estimated direct use of fuel for power generation in Saudi Arabia would rise to 540,000 barrels per day this year compared with 403,000 barrels per day last year.

Refinery use was forecast to rise to 1.987 million barrels per day from 1.827 million barrels per day in 2010.

Banque Saudi Fransi Chief Economist John Sfakianakis said energy subsidies, which he estimated cost 27 billion Saudi riyals ($7.19 billion) per year for transport alone, had to be addressed urgently to preserve the nation's oil capacity.

“Every day in Saudi about 50,000 barrels of oil are being burned just because of the school run,” Mr. Sfakianakis said.

Surging energy consumption is an issue across the Gulf, including in the United Arab Emirates and Kuwait, which apart from Saudi Arabia are the only other countries with significant spare capacity.

A report last year by consultant Wood Mackenzie Ltd. predicted Gulf states would struggle to find enough gas for power, meaning more and more of their oil would be burned in power generation, rather than be made available for export.

Already, spare capacity in the United Arab Emirates and Kuwait is limited.

Analysts' estimates vary, with some pegging it at only around 500,000 barrels per day for the two producers combined.

A source at Kuwait's National Petroleum Co. said Kuwait held between 600,000 and 700,000 barrels per day of spare capacity.

The United Arab Emirates has said it has total capacity of around 2.8 million barrels per day and is producing around 2.3 million barrels per day, leaving 500,000 spare.

Of the total 2.8 million barrels per day, half is light Murban crude.

“Around 60% of Saudi's spare capacity is heavy and 40% is light, and out of the total OPEC spare capacity, which is around 5 million to 6 million, 30% is light,” estimated Kamel Al Harami, an independent oil analyst based in Kuwait.