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Oil rises above $101 on Egypt unrest | ASHARQ AL-AWSAT English Archive 2005 -2017
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LONDON, (Reuters) – Brent oil prices rose above $101 a barrel on Friday after Egypt’s President Hosni Mubarak refused to step down, stoking fears that the rising tensions could disrupt oil flows or spread to major producers in the region.

Brent futures jumped by more than $1 on Friday on rising tensions but later pared gains as Egypt’s powerful army moved to defuse tensions by lifting 30-year-old emergency laws.

ICE Brent crude futures were up by 62 cents at $101.49 a barrel and U.S. crude futures were up 11 cents at $86.84 a barrel.

This left the spread between the two benchmarks at around $14.50 a barrel, but down from a record high above $16 in the previous session.

“The market is very, very nervous about Egypt…The level of fear in the financial market is influenced by events in Egypt. It remains the most dynamic issue,” said Eugen Weinberg, senior commodities analyst at Commerzbank.

Egypt is not a major oil producer and it consumes about as much as it pumps. However, investors worry more about the prospect of severed oil flows along a strategic pipeline and the Suez Canal, which together amount to around 2.5 million barrels per day (bpd) of crude oil.

Traders are expected to watch closely for any sign that protests in oil producing nations Iran and Algeria planned for the next week could develop into broader popular movements resembling those in Egypt.


Trading has been unusually volatile in the past two trading sessions as investors have grappled with the significance of conflicting geopolitical signals in the Arab world.

A market rumor that King Abdullah of top oil producer Saudi Arabia was seriously ill or may even have died stoked a rally on ICE Brent futures but prices quickly pared gains after Saudi sources dismissed the talk.

Many analysts expect prices to remain volatile.

“It will stay jittery on Egypt concerns,” said analyst Andrey Kryuchenkov of VTB Capital.

Oil prices have largely ignored news that the Organization of Petroleum Exporting Countries has boosted oil output to a two-year high to help cool the price rally above $100 a barrel.

In its monthly report, the producer organization said on Thursday its January production rose by 400,000 bpd to 29.72 million bpd, the highest since December 2008 when it last made an official change in its output.

Oil major Total said on Friday it plans to spend $20 billion on new oil and gas projects this year to boost flagging production after reporting bumper 2010 earnings.

“Fundamental data is not prevailing in the market…it is only creating background noise. It’s more about the sentiment in the market,” said Weinberg.

In the U.S., economic data was positive with new applications for unemployment benefits dropping to a 2-1/2-year low last week, pointing to a stronger footing for the labor market as the global recovery gathers momentum.