Fear of Suez Canal closure drives up price of crude oil futures
Crude oil futures spiked Friday as violent anti-government demonstrations roiled Tunisia, Egypt, Lebanon and Yemen. Of particular concern is the besieged government in Egypt, which controls the Suez Canal. The Suez canal is a main artery for the shipment of oil from the Middle East to the Western Hemisphere.
Egyptian unrest threatens oil supply
Fears that a closure of the Suez Canal could disrupt Middle East oil shipments intensified Friday. Fierce anti-government protests that began in Cairo earlier in the week had spread across Egypt. In the capital of Cairo, protesters took over the streets and burned the ruling party’s headquarters to the ground. In the cities of Suez and Alexandria, The Egyptian military moved into both cities to help police quell protests. Thousands of Egyptians defied a nationwide curfew to fight with police and set fire to vehicles and buildings. The U.S.-backed government of Egyptian president Hosni Mubarak, who has ruled the country with an iron fist for 30 years, is said to be seriously threatened.
Suez Canal fears drive up oil futures
It’s reported that 80,000 people were demonstrating against the Mubarak government in the streets of Port Said, a strategic city at the mouth of the Suez canal. If the Suez Canal were blocked, oil and fuel shipments from the Middle East to the Western Hemisphere would be forced to sail around the southern tip of Africa. Adding thousands of miles to the route is expected to tighten supplies and drive the price of oil upward. On Friday traders were feverishly buying up oil in a bet that anti-government sentiment throughout the Arab world will spread to oil producing countries. Crude oil futures for March delivery went up 4.3 percent to $89.34 a barrel on the New York Mercantile Exchange.
Egypt’s week from hell
Anti-government demonstrations now threatening the Suez Canal erupted on Jan. 25. Thousands of Egyptians poured into the streets of Cairo, inspired by a popular revolt that forced Tunisian president Zine El Abidine Ben Ali to flee the country on Jan. 14. When the government cut off Internet and mobile-phone access and arrested leaders of the Muslim Brotherhood, protests spread through the country. So far nine people have died. The State Department issued a travel alert to U.S. citizens Friday.