Since mass protests affected successful regime changes in Egypt and Tunisia, demonstrations have spread to other countries in the Middle East and North Africa (MENA)–most notably, Libya, which is now mired in an internecine conflict.

The civil war in Libya and spreading unrest throughout MENA fueled a substantial rally in crude oil prices, with Brent approaching $120 per barrel at one point. Although oil prices have begun to subside as the market steps back from the ledge, the reaction to a potential supply interruption in Libya is particularly instructive.

Libya’s annual output of about 1.8 million barrels per day and exports accounted for just 1 percent of global oil production in 2010. (See “Drop in the Bucket.”) The country’s exports total about 1.5 billion barrels per day. With OPEC seemingly comfortable with oil prices in the range of $90 to $110 per barrel, there was little question that the cabal would step in to make up for any decline in Libyan production. If oil were to remain above $120 per barrel for an extended period, global economic growth would suffer and energy demand would decline–a scenario that OPEC would prefer to avoid.

Of course, Libya’s troubles weren’t the sole factor behind the recent run-up in oil prices. Media reports fueled fears that civil unrest would spread to Saudi Arabia, the primary source of spare oil production, though the Saudi government’s response made such an outcome extraordinarily unlikely.

This situation serves as an important reminder of how tight the supply-demand balance has become in the global oil market, a secular trend that will be in play for the foreseeable future. The equation is simple: Recovering oil demand in developed nations and rapidly increasing fuel consumption in emerging markets continue to outstrip supply growth.

That the market had such a strong response to the crisis in Libya underscores oil’s importance to the global economy and provides a preview of the coming years as supply struggles to keep up with demand.

Although oil prices command the most headlines, coal prices have also run up considerably in 2011, bolstered by extensive flooding in Queensland, Australia that closed approximately 75 percent of the coal mines in the state and shut down key transportation infrastructure. Queensland accounts for much of the country’s metallurgical (met) coal production.

Australia sells roughly 80 percent of its black coal production to overseas markets, making it the world’s leading exporter of the commodity. The country accounts for more than half of the international trade in met coal, the variety used in the iron and steel industries. As you can see in “After the Flood,” the average weekly price of Australian hard coking coal has skyrocketed in the wake of the devastating floods.

That customers have been willing to pay such exorbitant prices for met coal underscores the strength of global demand, particularly in China and India, which, together account for slightly less than one-third of Australia’s exports of coking coal.

In the near term, these elevated prices ensure that producers such as Peabody Energy Corp (NYSE: BTU) don’t suffer too much from decreased output. But the long-term growth story also remains attractive: Demand for Australian met coal will only increase as emerging Asian economies continue to develop.

In fact, according to Peabody Energy, global consumption of met coal will grow by 600 million metric tons over the next 10 years, with demand in China and India leading the way. As the coal super-cycle unfolds, the price of Australia’s high-quality met coal will continue to climb.

 Investors should continue to add exposure to names that will benefit from tightening supply and demand in the global oil and coal markets. Not only will this strategy pay off over the long term, but as recent developments suggest, any temporary hits to supply can also lead to impressive short-term returns.

Around the Portfolios

Gushers Portfolio holding Valero Energy Corp (NYSE: VLO) announced that it will acquire the Pembroke Refinery in Wales as well as extensive marketing and logistics operations in the US and Ireland from Proven Reserves Portfolio holding Chevron Corp (NYSE: CVX). The transaction is expected to close in the third quarter and will be worth $730 million, plus working capital.

The deal is a win-win for both parties. The divestment marks the latest step in Chevron’s efforts to winnow its downstream assets down to those that will benefit from rising demand in Asian emerging markets. At the same time, the transaction diversifies Valero Energy’s refinery operations and increases the firm’s exposure to diesel and distillate margins.