1-Feb-2011 11:11 AM

Oil surges to highest in more than two years

Oil surged to the highest price in more than two years in New York and Brent crude topped USD100/barrel as a seventh day of unrest in Egypt raised concern that supplies may be disrupted (Bloomberg/AFP/The National, 01-Feb-2011). Oil for Mar-2011 delivery increased 3.2% to USD92.19 a barrel on the New York Mercantile Exchange, the highest settlement since 03-Oct-2008. Brent for Mar-2011 settlement gained 1.6% to USD101.01 a barrel on the ICE Futures Europe Exchange in London, the highest settlement since 26-Sep-2008. It touched USD101.73 on an intra-day basis. Around 2.5% of global oil production is shipped through Egypt via the Suez Canal and the adjacent Suez-Mediterranean Pipeline, according to Goldman Sachs Group. The canal has the capacity to handle 2.2 million barrels of oil a day while that of the Sumed oil pipeline is 2.3 million barrels a day, according to Goldman Sachs. Meanwhile, OPEC stated it would increase output if unrest in Egypt disrupts supplies of crude from the Middle East. Separately, Saudi Arabian Oil Minister Ali Al-Naimi stated oil prices at USD70 to USD80 a barrel are “appropriate”, adding that he is confident oil-market supply and demand are “relatively balanced”.