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Nervous eyes on the Suez Canal as Egyptian unrest hits world economy

Text by News Wires

Latest update : 2011-02-01

Egypt’s political turmoil has left traders nervous, pushing oil and gold prices up and sending Asian stock markets down as concerns mount that the unrest will affect trade through the Suez Canal, a vital shipping route.

AFP - World oil prices stayed above $100 a barrel in Asian trade Tuesday on fears the escalating turmoil in Egypt will disrupt supply flows through the strategic Suez Canal.
 
Prices barrelled through the psychological threshold overnight for the first time since the 2008 economic crisis as protests in Egypt demanding the removal of President Hosni Mubarak mounted.
 
Egypt is not a major oil producer, but is home to the vitally important Suez Canal, which carries around 2.4 million barrels of oil a day -- roughly equivalent to the daily output of Iraq or Brazil.
 
New York's main contract, light sweet crude for March delivery, was down 20 cents at $91.99 per barrel in afternoon trade.
 
Brent North Sea crude for March fell 50 cents to $100.51 after touching 101.73 overnight, the highest level since October 2008.
 
Prices were slipping in early Asian trade as traders cashed in their profits, said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
 
"One of the factors might be profit-taking since we're at 27-month highs," she told AFP, adding that the dip might be temporary as the Egyptian political crisis dragged on.
 
"For Brent, we can still see more upside... If the tensions continue, it will continue to provide support for the oil prices," she said
 
But the ebullient gains on the crude market would eventually be capped by "many parties that are concerned that high prices might form a threat to the economic recovery," Ong said.
 
Egypt has been engulfed in more a week of street protests demanding and end to President Hosni Mubarak's 30-year rule.
 
Analysts from Barclays Capital said while the concerns over Egypt fuelled the oil price increase, "we think that the probability for closure of the Suez Canal is extremely unlikely at the moment."

Date created : 2011-01-31

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