What will all of this mean for world oil prices and regional financial markets, especially against a broadly weaker global economic backdrop and deteriorating liquidity in financial markets? In the absence of further risks to supply, oil markets are likely to remain more influenced by the global economic cycle than by geopolitical risks, though these should still help provide a floor in $90 a barrel range, Nomura said in its special report “MENA: Beyond the shores of Tripoli” released on Wednesday.As for regional credit markets, we expect pressure to remain on the North African credits, as post-revolution/pre-election uncertainty in both Egypt and Tunisia means that consumption, business investment, and tourism will remain weak even if trade and employment get a boost from the fall of the Qaddafi regime in neighboring Libya. High-grade Abu Dhabi and Qatar should fare better - both because of fewer economic and political risks, but also because they are supported by high grade diversification away from Western Europe, on the margin. Nonetheless, EM credit as a whole remains vulnerable to broad-deterioration in liquidity conditions in global financial markets, which could overwhelm any relative value moves in the coming days and weeks, the report saidLibyan impasse passesThe major event for the MENA region over the summer/Ramadan period was the demise of Qaddafi’s regime. While the long-standing leader remains at large and fighting continues in some areas, the country is moving ahead into the first phase of its post-Qaddafi existence. The implications of the end of the conflict for the region are multiple:1. Oil. Nomura highlighted earlier the continued constraints on regional oil supply, particularly in Libya and we continue to judge the possibility of quick resumption of oil production to 2010 levels (when Libya accounted for 2 percent of global oil production) to be low. Technical difficulties associated with the shutdown of pipelines, and impairments to some oil field infrastructure as a result of looting remain key challenges. While there have been some discrepancies in the reports emerging from the transition government and international oil companies, most initial studies have concluded that damage to production facilities is actually less than earlier feared. The biggest concerns seem to be centering on export terminals.Aside from damage repair, the speed of return of foreign companies, which account around 50 percent of total Libyan oil production, will be an important factor in how quickly production can be ramped up. While a number of foreign companies have expressed their willingness to resume production relatively quickly, their enthusiasm may be tempered by uncertainty over the political process, damaged infrastructure, and security concerns for their employees. The International Energy Agency (IEA) estimates it will take the country beyond 2013 to restore production levels to “normal”.The return of political stability and the formation of a unified government will clearly be crucial to attract new investment to the sector. The incentives to resume production as soon as possible are high, as oil revenues are likely to become the engine of the transition period. Foreign oil companies are also keen to see production restart in order to capitalize on the high oil prices bearing in mind that prior to the unrest, Libya accounted for almost 20 percent of Europe's mineral fuels imports - more than any other country in the region. While initial resources for a new government are likely to be drawn from the approximately $100 billion in frozen Libyan funds, we think long-term fiscal needs will depend on the oil sector, which in the past has contributed some 80 percent of the state’s revenues and 25 percent of its GDP, the Nomura report said.Other notable cases of production stoppages resulting from the war in Iraq or the strikes in Venezuela have shown that, even though oil supply can restart soon after the conflict, it often takes years for production to reach the levels prior to the decline. Moreover, oil production has been depressed for longer in Libya than in the above examples and so the recovery could also take longer. Restoring production in the northern Sirte Basin, which accounts for around two-thirds of Libya’s total oil production and 80 percent of its total oil reserves, will be essential, but especially challenging. The region appears to require extensive repair work and the National Oil Company, generally loyal to Qaddafi, has control of important oil production plants within it.Given all these impediments, it is not surprising that oil markets appear for now to have ignored the end of the conflict and questions of increased capacity. Nonetheless, ongoing concerns about weakening global growth would seem to similarly push prices lower, so it is not always so easy to disentangle the two forces. Looking ahead, we are not expecting any significant change in production capacity and expect oil markets to continue to be led by global economic and financial conditions, the report added.2. Neighboring countries Egypt and Tunisia stand to gain as a result of the end of the Libyan conflict. For Tunisia in particular, this will represent a boon for border trade, which had virtually come to a halt during the conflict. There are also likely to be opportunities to get involved in rebuilding, as well as the establishment of private sector activity, of which there was very little during the Qaddafi years. For Egypt, the opportunities lie in the building of infrastructure, and especially an increased demand for cement.Both countries should also benefit resumed need for foreign workers, which may provide some relief for the very difficult employment conditions, and the added benefit of increased workers’ remittances. Recall that before the conflict, Egypt had an estimated 1 million nationals working in Libya. In addition, many other foreign workers previously in Libya hailed from countries in sub-Saharan Africa associated with the provision of mercenary soldiers employed by Qaddafi. It is unclear whether these workers will be welcome to return, nor whether they will find the prevailing security conditions suitable, potentially leaving more employment opportunities for others.Finally, tourism receipts in both Tunisia and Egypt are expected to benefit from the end of the Libyan conflict. In 2010, Tunisia earned $567 million in tourism and health care receipts. For the same year, Libyans contributed $523 million to Egypt’s tourism receipts. It is not unreasonable to expect these figures to be surpassed in coming years.3. Release of Libyan frozen assets. The largest holders of frozen Libyan assets ($37 billion in the US, $20 billion in the UK and $7 billion in Germany), have all signaled willingness to release them, which could provide important support for the Libyan economy and important opportunities for foreign investors. Nonetheless, the Aug. 25 announcement of their partial release came with heavy restrictions that limit not only how the funds will be spent, but who will access them. 4. Broader regional inspiration. The ongoing conflict in Syria no doubt has taken some inspiration from the toppling of the Qaddafi regime, though it remains mired in still very challenging conditions. Apart from Syria, however, Libya does not appear to have re-ignited protest movements elsewhere, the Nomura report said.