Oil Prices Jump $2 On Concerns Over Egypt
Oil prices jumped to more than $100 per barrel on Wednesday over fears that fallout will result from Egypt unrest and the coup that brought about that unrest.
Oil prices rose to $102.18, their highest price in more than one year.
Actual oil production is Egypt is low compared to other traders; however, the country controls the Suez Canal and pipeline, which moves approximately four million barrels of oil per day. Egyptian officials also hold a lot of influence in the Middle East and North Africa, and those areas provide approximately one-third of the world’s oil production.
In a note to investors, analysts at Lido Isle wrote:
“It’s anyone’s guess as to how high crude oil can go when crisis erupts in the Middle East. We believe this is a key breakout move and would not be surprised to see crude head higher from here.”
Egyptian president Mohamed Morsi was ousted on Wednesday evening, which has led to further concerns over the country’s immediate direction and extended future. Morsi was replaced in the interim by the head of the country’s highest court.
Protests in Egypt are the largest witnessed since citizens in Egypt ousted longtime dictator Hosni Mubarak in 2011.
ClearView Energy Partners say of the conflict in Egypt that the Muslim Brotherhood and the Egyptian military “could spur other Islamist actions against allies of the military, including several Arab producing nations allied with the United States.”
In the past two months, oil prices have risen by 16 percent. While Egypt’s unrest has definitely not helped oil prices, it is only part of the equation. Analysts cite an improving economy, rising demand, and other variable for the rise in acquisition costs.
Do you think that oil prices are out of control because of Egypt or because of various variable that have clashed with one another?