Kuwait official says, Egypt unrest may push oil above US$110 bbl
Global Crude Oil prices could tap at, or exceed 110 bbl if political unrest in Egypt continues, a member of Kuwait's Supreme Petroleum Council said Sunday.
Crude Oil prices have spiked due to tension in Egypt. Brent Crude hit 100 bbl for the first time since Y 2008 on fears chaos could spread through the Middle East, which together with North Africa pumps over 33% of the World's Crude Oil.
I expect oil prices to reach 110 during the 1-H of Y 2011, however, it could go above that level if Egypt's current crisis continues, Imad al-Atiqi, a member of the OPEC member's highest Oil policy body, said in an interview. A huge amount of oil passes through the Suez Canal and the country's stability is essential for the Middle East's stability, particularly Israel, he said.
Egypt is a very small Oil and Gas exporter and the main danger of the unrest is seen as the closure of the Suez Canal or the Suez-Mediterranean (SUMED) Oil pipeline which passes near Cairo.
The canal ships 1.5M BPD of Crude and the pipeline carries 1M BPD. Together they account for nearly 3% of daily Global Crude Oil demand.
Thursday, Egypt's Prime Minister Ahmed Shafiq said the Suez Canal was operating normally despite the unrest.
Some oil-focused bankers and fund managers say that even if unrest in Egypt cuts flows along the strategic pipeline and the Suez Canal, the Oil price spike would likely be short-lived and flows would resume quickly, regardless of who is in power.
OPEC members are comfortable with an Crude Oil price ranging between 90 and 100 bbl, Atiqi said, adding the Group could meet before their scheduled meeting in June if prices continued rising quickly above 110 bbl.
OPEC ministers and consumers will discuss Crude Oil output policy on the sidelines of an International Energy Conference in Saudi Arabia on February 22, but a formal decision there is unlikely, the OPEC Secretary General had said recenly.
OPEC says it has spare capacity of 6M bbls to meet lost output, but would open it only when it sees a shortage in the market rather than a speculator driven rally in the price.-Paul A. Ebeling, Jnr. www.livetradingnews.com