Oil spikes amid Egyptian unrest

Shipping through Suez Canal not interrupted

February 1, 2011
by Purchasing b2b staff

SINGAPORE: Oil prices in Asia hovered above US$92 a barrel February 1 as a chaotic power struggle in Egypt raised the risk of disruptions to the Suez Canal, a major route for oil tankers to Europe and North America.

Benchmark crude for March delivery was down 11 cents to US$92.08 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose US$2.85, or 3.2 percent, to settle at US$92.19 on January 31.

A coalition of opposition groups called for a million people to take to Cairo’s streets February 1 for a massive street protest. The move is a bid to oust 82-year-old president Hosni Mubarak as an uprising against his 29-year rule begins its second week. Egypt’s military said it would not use force on marchers and recognized “the legitimacy of the people’s demands.”

Oil has jumped about eight percent in the last two trading sessions amid fears chaos in Egypt could disrupt the two million barrels of crude per day that pass through the Suez Canal and an adjacent pipeline. So far, the Suez remains open, and shipping has not been interrupted.

“The concern that the popular uprising in Egypt will impact either of these pieces of critical infrastructure has applied pressure to the price of crude,” said Richard Soultanian of NUS Consulting Group.

In other trading, Heating oil fell 1.3 cent to US$2.73 a gallon and gasoline slid 0.6 cent to US$2.49 a gallon. Natural gas futures for March delivery were down 2.5 cents at US$4.39 per 1,000 cubic feet. In London, Brent crude was down 41 cents at US$100.60 a barrel ICE Futures exchange.