Crude prices rise, but Egypt turmoil may not have much effect

Opponents of Islamist President Mohammed Morsi wave Egyptian national flags during a protest outside the presidential palace, in Cairo, Egypt, Monday, July 1, 2013. (AP Photo/Khalil Hamra)

Unrest in Egypt is adding to anxiety in the oil markets, but is not likely to have much effect on oil prices already  elevated  because of turmoil in the Middle East, analysts said Monday.

Egypt’s Suez Canal is one of seven key world oil choke points, according to the U.S. Energy Information Administration. About 4 percent of world oil moved through that choke point daily in 2011, according to the agency’s  data.

Concern about the Egyptian uprisings of 2011 pushed oil prices at that point to a two-year high.

But there is enough oil in the market today that any potential disruption of that transit route would not be significant, said Bhushan Bahree, head of Middle East research for IHS CERA.

“There’s enough supply going around, but it does raise the usual concern,” Bahree said. “It isn’t anything new, but it’s just the level of it goes up and down depending on developments.”

Benchmark U.S. crude rose  $1.43 to close at $97.99 a barrel Monday on the New York Mercantile Exchange.

Some analysts   speculated that in addition to concerns about the Middle East, the higher price may reflect  expectations that weekly oil supply data due Wednesday will show a sizable drop, according to the Associated Press.

Markets: Saudi Arabia remains key to oil prices, despite U.S. production surge

Bahree said in an interview with FuelFix that continuing concern over developments in the Middle East, including sanctions on Iran, revolutions in Tunisia, Libya and Egypt, and a war in Syria, has added a premium to oil prices .

“A lot of that is already built in and when you get more disturbing news about protests and uncertainty, people get more anxious,” he said.

Bill Herbert, managing director of research for investment banking firm Simmons & Company International, said he does not expect a significant impact on oil prices since Egypt itself is not a major producer.

“If you look at Brent oil prices it really hasn’t done a whole lot,” Herbert told FuelFix.

Brent crude, the international benchmark, gained 84 cents to  $103 a barrel Monday on the London ICE Futures exchange.

By contrast, oil prices surged in 2011, during a period of widespread upheaval in the Middle East, Herbert said. Brent crude prices jumped in 2011 from around $94 at the start of the year to a high of more than $123, largely because of unrest in Libya, a major oil exporter.

“It’s something that we keep our eyes on,” Herbert said. “We’ll see what happens.”

Millions of Egyptians have taken to the streets throughout the country calling for political changes. The development inspired an ultimatum from the military on Monday, which reportedly promised to intervene if Egyptian President Mohamed Morsi does not meet protesters demands.

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