Oil prices rise on Egypt concerns

LONDON, Aug 16, 2013 (AFP)

Oil prices rose on Friday, supported by concerns about the impact on crude supplies from the turmoil in Egypt that has claimed the lives of almost 600 people.

Investors are closely watching whether the latest unrest in Egypt will escalate and affect stability in the neighbouring and oil-rich Middle East region.

Brent North Sea crude for delivery in October gained 43 cents to stand at $110.01 a barrel in London midday deals.

New York’s main contract, West Texas Intermediate for September, advanced 26 cents to $107.59 a barrel.

 ”Oil prices advanced … on worries that escalating violence in Egypt could impact the oil shipment along Suez Canal or spread across the Middle East, where supplies already face disruptions,” said Lee Chen Hoay, investment analyst at Phillip Futures.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, said that oil prices already included a “risk premium” as investors grow accustomed to constant threats of a disruption in Middle East supply.

“Egypt is clearly having an impact on prices, but the reality is constant talk of a Middle East supply disruption has almost become background noise for investors,” he said.

 Traders are worried that the unrest could hit crude shipments through the Suez Canal and Sumed Pipeline, which provide a link between Europe and oil producers in the Gulf.

Although Egypt is not a major oil producer, the Suez canal carries about 2.5 million barrels daily, about 2.7 percent of global supply.

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