Investors fear that Egypt
Morsi protests and crackdown will spread supply disruption (Photo: Reuters)
Brent crude oil has breached the $110 per barrel mark as continued violence in Egypt sparked investor fears that the unrest could spread and affect supply security across the Middle East and North Africa.
The three-month forward contract for Brent crude oil hit $110.40 per barrel by 0900 BST although it is still lower than Brent's four-month high of $111.53 per barrel.
While Eqypt is not a major oil producer, market participants fear that the geo-political unrest could spread to key areas such as the Middle East and other parts of Africa.
"Egypt is not directly causing the shortage of oil supply but is adding to concerns that other, already strained, markets could be affected," said Malcolm Graham-Wood, analyst at VSA Capital.
"Egypt doesn't produce a huge amount of oil but the country does have the Suez canal which some people fear could pose as an issue."
Libya Causes the Most Concern
The Middle East, which pumps more than a third of the world's oil, is tipped to be at the forefront of investor's concern as countries, such as Libya, have seen oil production and exports crippled by violence and strikes.
"Bloodshed and unrest in Egypt and the disruption of oil supplies from Libya have put a floor under oil prices," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
Libya's the lowest level since the 2011 civil war and analysts say that this is more of the major problem to the world's oil energy supply.
"While Egypt poses as a geo-political concern, Libya is still posing a problem for supply. Its production is still below the level from two years ago and there are a number of disruptions that it should have solved by now."
"Furthermore, problems with Iraqi distribution are also exacerbating the energy supply mix picture."
However, crude flows resumed through a pipeline from Iraq's Kirkuk oil fields to Turkey's Mediterranean port of Ceyhan, Iraqi oil officials said at the weekend, which has eased some supply fears.
Shutting Services and Halting Production
Egypt has set in motion legal process for disbanding the Muslim Brotherhood amid the snowballing unrest in the country, a day after the interim prime minister called for dissolving the Islamist group.
Only one week ago, oil giant Shell announced that it had temporarily shut its offices in Egypt, while Sweden's Electrolux and US' General Motors have halted production in the country, as the death toll continues to rise following the Wednesday massacre that has killed 850 people.
In early European trading on 19 August, shares in French cement maker Lafarge fell by 2.8% after investors feared that the clashes in Egypt could add to the company's weak second-quarter results.
Egypt, which accounts for around 10% of Lafarge's balance-sheet exposure, was one of the worst performers on France's blue-chip CAC 40 index.
To report problems or to leave feedback about this article, e-mail:
To contact the editor, e-mail: