Posts tagged “Egypt”
Geopolitical Risk Continues, Part Two
Turmoil in Egypt continues to roil oil markets and confound Middle East regional stability. Goldman Sachs said Monday, August 19th, five days after the violence escalated, it expected tighter oil markets to propel Brent to $115 “in the very near term.” More interesting though are the shifts occurring in the geopolitical landscape of the broader Middle East.
Saudi King Abdullah publicly gave his approval and support for the military-backed government of Egypt. He pledged a $12 billion aid package along with the UAE and Kuwait, four times as much as the military and economic grants from the U.S. and the European Union combined ($1.5bn and $1.3bn respectively). The threat of political Islam vis-a-vis the Muslim Brotherhood is seen as potentially up-ending stability in the Kingdom. This high-stakes game of regional poker has just gotten more complicated. The outcome, which may occur in waves of violence and instability, could take many years to be realized.
Geopolitical Risk Rises Again
The unrest in Egypt reverberated across oil markets to a degree, and a cloud of an unknown magnitude hangs over the Middle East North Africa (MENA) region once again. Some analysts expect oil prices, which have already risen to account for the high-octane volatility of Egypt’s political situation, to rise further. The Egyptian military’s crackdown on pro-Morsi supporters in mid-August has led to a significant death toll, with government condemnations ringing across the globe.
Brent crude oil prices have already risen by $10 per barrel since the military took over Egypt’s government in early July. However, conflict in Syria and unrest in Libya have also played a role in rising oil prices. WTI crude was trading at $107.33 per barrel, up 0.45 percent, and Brent up 0.34 percent, at $110.58 per barrel, on the morning of August 15th (GMT), after pro-Morsi supporters were just overrun. By the end of the day, Brent crude futures for September delivery traded at $111.11, the highest since March. A spokesperson for the Suez Canal, which transports oil from the Middle East to global markets, says oil transportation infrastructure security has been re-fortified. The Suez Canal and SUMED (Suez-Mediterranean) Pipeline are strategic routes for Persian Gulf oil and gas shipments to Europe and North America.