Friday, October 9th9.6°C

Egypt crisis raises oil price

The price of oil soared to above US$102 a barrel Wednesday for the first time in over a year as Egypt's political crisis intensified, raising the risk of fuel supply disruptions in the Suez Canal.

A report showing an unexpectedly large fall in U.S. stockpiles of crude oil also helped boost prices.

By early afternoon in Europe, benchmark crude for August delivery was up $1.86 at $101.46 a barrel in electronic trading on the New York Mercantile Exchange, having risen as high as $102.18 earlier in the session. On Tuesday, the contract gained $1.61, or 1.6 per cent.

Embattled Egyptian President Mohammed Morsi vowed not to resign hours before a deadline to yield to the demands of millions of protesters or see the military suspend the constitution, disband parliament and install a new leadership.

The Islamist leader demanded that the powerful armed forces withdraw their ultimatum, saying he rejected all "dictates", from home or abroad. On the streets, the sense that both sides are ready to fight to the end sharpened, with clashes between Morsi's supporters and opponents killing at least 23 people, most of them in a single incident of fighting outside Cairo University.

Egypt is not an oil producer but its control of the Suez Canal, one of the world's busiest shipping lanes that links the Mediterranean with the Red Sea, gives it a crucial role in maintaining global energy supplies. The Middle East accounts for about a quarter of the world's crude oil output and over two million barrels of oil are transported through the Suez Canal daily.

During the first three months of 2013, 821 oil tankers and 152 ships carrying liquefied natural gas (LNG) passed through the Suez Canal.

The Suez Canal Authority, which operates the waterway, said it "has all the authorities needed for running the Canal without being limited by the laws and the systems of the (Egyptian) government."

Some analysts suggested market reaction to the political crisis in Egypt was exaggerated.

"Each time there is a bit of confusion in Egypt there will be calls that a geopolitical premium needs to be added to oil because of the risk to the Suez Canal," said Olivier Jakob of Petromatrix in Switzerland. "But if there is one thing that the military has control of in Egypt it is the Suez Canal. We therefore do not see a significant risk for free passage on the waterway."

The market reaction may have been heightened by other factors, such as signs that demand is growing. The American Petroleum Institute said Tuesday that U.S. crude inventories dropped by 9.3 million barrels last week, a much larger decline than forecast.

The Canadian Press

Read more Business News

Recent Trending

Today's Market
S&P TSX13972.37-6.29
S&P CDNX550.33+3.27
S&P 5002014.50+1.07
CDN Dollar0.7727+0.0043
Natural Gas2.494-0.004

Okanagan Companies
Pacific Safety0.225-0.005
QHR Technologies Inc1.23-0.02
Metalex Ventures0.055+0.005
Russel Metals21.23-0.32
Copper Mountain Mining0.67+0.06
Colorado Resources0.07-0.01
ReliaBrand Inc0.0238+0.0072
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.08-0.01
Decisive Dividend Corp3.25+0.14
Diamcor Mining0.96+0.02



22703271254 Loseth Drive
4 bedrooms 5 baths
more details
Click here to feature your property
Please wait... loading

Income for life?

Photo: Thinkstock.comIn almost every conversation I have with clients these days, the topic swings to interest rates. What direction they’re going, how long will they stay where they are and how...

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...



Member of BC Press Council