Oil Price Spikes as Unrest in Eqypt Looms

The political unrest in Egypt has made its impact today as benchmark oil prices rose in apprehension of the deadline set by the country’s military on the Arab state’s President Mohammed Morsi to give in to the demands of protesters.

In the US, light crude reached a 14-month high to over US$100 a barrel whilst Brent crude oil registered as high as US$105.79 a barrel today at the New York Mercantile Exchange (NYMEX).

Oil prices tend to shoot up every time there is unrest in Middle East as the region contributes a huge portion of global oil supply. In particular, Egypt is home to the important shipping lane of Suez Canal, though the Suez Canal Authority brushed aside worries saying the waterway will be able to function regardless of the turn of events in the capital.

Over a fourth of the total world supply of oil comes from the Middle East, particularly from the members of the Organisation of Petroleum Exporting Countries, which are in close proximity to Egypt.

Industry index for oil and gas producers on the London Stock Exchange indicated a 0.58% increase to 7,742.15 by midday, London time, as firms benefit from the increase in benchmark oil price contracts.

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