Egypt unrest pushes oil price above $111 a barrel: Telegraph
YEREVAN, August 16. /ARKA/. Brent oil prices climbed above $111 a barrel to a four-month high on Thursday on fears violence in Egypt could affect the Suez Canal or spread in the Middle East, where supplies are already disrupted.
Egypt's government declared a state of emergency on Wednesday following deadly clashes between riot police and supporters of ousted President Mohamed Mursi.
The country is not a major producer of crude oil, but investors fear that unrest could choke major supply routes such as the Suez Canal or spill over into oil-exporting neighbours.
“Disruptions at the Suez Canal are unlikely, but markets never move on what's likely. They move on fear. If people are fearful about supply, they buy even if the market is fundamentally well supplied," Michael Hewson, an analyst at CMC Markets, said.
"I think Brent has the potential to go as high as $113 to $114 but not much higher."
Front-month September Brent, which expires on Thursday, jumped by over a dollar to reach $111.29 in early trading in London on Thursday, after earlier reaching $111.41, the highest since April 2. US crude rose 69 cents to $107.54.
The Suez Canal and Egyptian ports were operating normally despite the unrest gripping the country, shipping sources said on Wednesday.
But a Muslim Brotherhood statement vowing to bring down "Egypt's military coup" suggested that the standoff was unlikely to be resolved soon.
"Egypt may not be a major oil producer, but the Suez Canal is an important gateway, not just for oil flows but also for commodities. If there is any disruption or if the violence results in the shutting down of the canal, the impact will be quite severe," said Carl Larry, president of Houston-based consultancy Oil Outlook and Opinions. –0--