Oil prices stabilized today above the level of $109 per barrel, supported by concerns over supply from the Middle East and North Africa due to turmoil in Egypt and Libya.
In London, the price of a barrel remained almost unchanged compared to yesterday’s market close at $109.77. In the U.S. market, a barrel was also traded at nearly unchanged price compared to yesterday’s close, at $107.33.
Concerns that escalating violence in Egypt could affect oil transport through the Suez Canal, through which up to three million barrels pass daily, supported yesterday’s price increase in London to the highest level in four months.
The deeply polarized country is preparing for new conflicts after the Muslim Brotherhood called for a protest march today in response to security forces’ actions against Islamists, in which hundreds of people were killed.
In neighboring Libya, production is threatened by the collapse of civil society, violence, and strikes. Exports have thus slid to the lowest level since the civil war in 2011 that ousted Moamer Gaddafi.
“The risk premium is high and continues to rise,” said Carsten Fritsch from Frankfurt’s Commerzbank. “Given the worsening geopolitical situation and heightened tensions across North Africa and the Middle East, a price jump in London above $110 per barrel is also possible,” Fritsch added.
The Suez Canal and Egyptian ports are currently operating normally, Reuters quoted sources in the shipping industry on Thursday.
Although Egypt is not a major oil producer, investors fear that tensions could spill over into the wider region.
The Organization of the Petroleum Exporting Countries (OPEC) announced today on its website that the price of a barrel of its reference basket of oil was $107.96 on Thursday, which means it was $1.27 higher than the previous day.
