Egypt unrest sparks global instability fears
A motorist pumps gasoline into his car at a Shell in San Rafael, Calif.
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Bob Moon: Fears over those Egyptian protests rippled through global oil markets today. Crude prices hit $100 a barrel, on concerns the Suez Canal could end up being shut down.
There's a deeper worry: That the unrest could spread to other, much bigger oil-producing countries in the Middle East. But as we mentioned, stock markets around the world pretty much shrugged off these concerns.
From London, Marketplace's Stephen Beard reports.
Stephen Beard: Two million barrels of oil pass through Egypt everyday, most of it by tanker through the Suez Canal. Disrupting or stopping that flow would certainly hit the oil market, says Jason Kenney, energy analyst with the ING Bank.
Jason Kenney: If you were to see a total shutdown of Egypt, including the Red Sea and the Suez Canal, then it would be a similar effect to say a hurricane in the Gulf of Mexico.
But the oil cartel OPEC could make up that shortfall, pumping as much as five million barrels more a day. What's really worrying the oil market is the fear of instability. And that unrest having spread from Tunisia, to Egypt could now take hold elsewhere in the Arab world, perhaps even in Saudi Arabia itself. Then, say analysts, crude prices could easily hit $150 a barrel.
Neil Mackinnon is with VTB Capital.
Neil Mackinnon: If we were to see a sharp upward spike in the oil price from here, that would have a very damaging effect on the prospects for global economic recovery during the course of this year.
Which makes the generally muted stock market reaction in Europe and the U.S. seem a little odd. But Mike Lenhoff of stockbrokers Brewin Dolphin says equity investors are focusing on growth in the U.S. and China.
Mike Lenhoff: Both China and the United States are really spearheading the expansion that will take place this year. And I think that's what equity markets have their sights on.
But he concedes that even stock market investors are not totally oblivious to the Egyptian turmoil. They are watching the protests, just a little nervously, out of the corner of their eyes.
In London, this is Stephen Beard for Marketplace.