The death of former Libya Leader Moammar Gadhafi probably will not lead to a drop in crude prices as measured by West Texas Intermediate metric, analysts say.

Libya was producing about 1.7 million barrels per day (bpd) of oil at the start of 2011 prior to the civil war, with about 1.5 million bpd exported, on a net basis. The civil war decimated production, with output plummeting to as low as 10,000 bpd before rebel gains; in recent months production has recovered to about 350,000 bpd, AFP reported.

The Libya output decline is one reason the Europe-based Brent crude price has soared to $109.39 per barrel -- a roughly $25 spread over U.S.-based West Texas Intermediate crude, which traded at $84.86 per barrel, down $1.28, on Thursday at mid-day. About 85 percent of Libya's oil was exported to Europe, which suggests that the Brent price should decline, if Libya can resume a normal production level, all other factors being equal. OPEC said it sees Libya's oil output rising to 1 million bpd within six months, AFP reported.  

Analysts: Libya Production Not a Market Changer

However, two analysts argue the latest events in Libya don't change the oil price equation outside of the Europe-based Brent price.

We don't anticipate any major change in trend in the oil price in the near-term, Research Director Kathleen Brooks of FOREX.com wrote Thursday. The situation in Libya remains unclear, the Eurozone debt crisis is still a threat to global commodity demand and we also can't forget that the weather phenomenon La Nina is expected to deliver a very cold winter to the East coast of the US and Europe...So there are many variables that determines the oil price and Libya is only one of many moving parts.

Richard Illczyszyn, senior market strategist at MF Global concurred.

It looks like we are seeing the risk premium return to the Brent market because what's occurring in Libya, Illczyszyn, said, Bloomberg News reported Thursday. The death of Gadhafi highlights concerns about Libya. The rebels are clearly divided and it's unclear how things will be resolved.

Oil Analysis: U.S. Gasoline and other distillate prices, such as heating oil and distillate prices, are a function of the West Texas crude price, hence if that crude price does not drop, U.S. oil/gasoline users will not see much price relief, even though, as noted, Europe may witness a price decline in Brent crude on likely increased Libya production.