Egypt, Suez Canal, and Oil Prices?

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I was wondering why the price shotup today after falling all week ....

But we have to remember Egypt, Saudi dictators have the world's largest army backing them.
 
Stuart's interesting notes on the protest and what it means ...

http://earlywarn.blogspot.com/2011/01/oil-food-and-wealth-of-mena-countries.html

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Thanks evnow. The first thought I had was about shipping thru the canal - I have no idea how much oil might go that way and how risk analysts and/or shipping/oil companies might adjust to stay clear of a perceived problem area.

Egypt is the most 'western' and liberal Islamic country, yet fundamental Islam has been trying to get control for years.

The 'Real Facts' or "ground truth' is what it is, but markets are more about psychology, fear, and greed - and it'll be interesting to see how a spreading wave of revolution might affect our lives. Interesting times.
 
I wouldn't call Egypt most western at all. Egypt is the poor cousin that is no longer western after the war. Even if Egypt falls it won't be a big problem... but Kuwait or UAE would be disastrous.
 
According to the U.S. Coast Guard, the unrest has so far had no affect on the volume or types of ships passing through the canal.

AndyH said:
Thanks evnow. The first thought I had was about shipping thru the canal - I have no idea how much oil might go that way and how risk analysts and/or shipping/oil companies might adjust to stay clear of a perceived problem area.
 
smkettner said:
I paid $3.80 at one spot just a couple weeks ago along CA395
That's nothing - I paid about $6/gallon on the stretch of PCH just north of Morrow Bay at the Ragged Point Inn and thought it was a bargain! By that time the gas light had been on for at least 20 miles (whoops!), so I put $20 in it - enough to get the Prius to some reasonably priced gas! Very beautiful drive, though.
 
http://online.wsj.com/article/SB10001424052748704680604576110530618545842.html?mod=googlenews_wsj
The violent protests in Egypt pushed both crude-oil and gold prices higher, as investors fled risky assets but acknowledged the Mideast country's proximity to larger oil producers.
Benchmark crude-oil futures surged 4.3% to settle at $89.34 a barrel on the New York Mercantile Exchange. It was the biggest one-day jump for Nymex crude since September 2009, in both percentage and dollar terms.
Egypt produces about 673,000 barrels of oil a day, according to the Joint Oil Data Initiative, a database, ranking it 21st among the world's oil producers.

More importantly, the country is home to two of the world's key energy supply routes: the Suez Canal, a transit point for oil and fuel shipments from the Persian Gulf to the Western Hemisphere, and the 200-mile-long Sumed pipeline, an alternative transit route to the canal.

About 1.8 million barrels a day of crude oil and refined products were shipped through the Suez Canal in 2009, according to the U.S. Energy Information Administration. The Sumed pipeline carried 1.1 million barrels a day that year.
More worrisome than disruptions to Egypt's oil production is the prospect that the unrest spreads to other hard-line states in the region, such as Libya and Algeria, both members of the Organization of Petroleum Exporting Countries. Other countries in the region, including Tunisia and Yemen, have been wracked by antigovernment protests in recent weeks, though neither is a major oil producer.

"If this thing spreads across the North African continent, gets into Libya, Algeria, then you've got trouble," said Stephen Schork, editor of the Schork Report energy newsletter.
 
LOL! what are we worried about? you honestly think that D.C will give up their armor-plated SUVs?

oh no, Hell no!!. we will have the entire Navy over there escorting each precious oil-ladened tanker over here while sucking on the boats bib for "mothers milk"

and yes, We EV drivers will still pay for it. i am sure a token increase in gas taxes "might" be approved, but on top of what has already been discussed?? LOL, ya that is a funny one. they will bury the cost in the "Stand up and fight for America" fund.

its hard to understand how addicted the country is to oil, especially here in the liberal West, but trust me; the rest of the country looks at us as traitors.
 
if things really get out of control congress will take action and institute rationing and price controls.. they will probably forbid the exportation of domestically produced oil.. I believe we produce enough oil to handle a 4 gallons per week ration of gasoline.. dont remember if its per car or per family. Priority would be given to over-the-road trucking, and we would see lots of NG conversions... Fat from polar bears would be rendered to be used as bio-diesel.
 
Herm said:
if things really get out of control congress will take action and institute rationing and price controls.. they will probably forbid the exportation of domestically produced oil.. I believe we produce enough oil to handle a 4 gallons per week ration of gasoline.. dont remember if its per car or per family. Priority would be given to over-the-road trucking, and we would see lots of NG conversions... Fat from polar bears would be rendered to be used as bio-diesel.
What level of unrest do you think it would take for Congress to take action?
 
I realize this is a 'what if' and is a less-than-optimistic view, but since so much of the 'market' is psychology, and so much of humanity is fear-based...

From: Team Pickens [mailto:[email protected]]
Sent: Tuesday, February 01, 2011 11:38 AM
To:
Subject: Unrest in Egypt and Imported Oil

Army:

T. Boone Pickens' long-standing warnings that our addiction to OPEC oil is a national security issue has attracted new attention as the unrest in Tunisia and Egypt threaten to spread to the oil producing nations of Nigeria, Angola and Algeria.

In the National Journal, reporter Amy Harder quoted Boone as saying:

"Nothing has happened that I've seen that has cut down on the availability of oil," oil tycoon T. Boone Pickens told National Journal Daily on Monday. "But the uncertainty has obviously crept into the market."

So, Harder asks, "what's got the oil traders all worked up?"

"They think it could go to the ultimate conclusion and that is that Saudi Arabia could be overthrown," Pickens said. "And that's the largest supply of oil in the world." Saudi Arabia shipped 367 million barrels of oil to the United States in 2009.

Harder points out that to reduce America's exposure to unrest in unstable countries and regions, "the transportation sector needs to be weaned off oil, increasing public transportation, shifting to electric vehicles, and, if Pickens had his way, natural gas engines for large trucks."

Also on Tuesday morning, reporter Darren Goode from the "Morning Energy Report" of Politico.com also talked to Boone:

WHAT EGYPT MEANS TO T. BOONE - Pickens thinks the situation in Egypt could get worse - a lot worse - for crude oil and gas prices and that reinforces his message to wean ourselves off of foreign oil imports. "We've already said that something like this was likely to happen and it has," Pickens told POLITICO's Darren Goode yesterday. "If it's not now, that civil unrest will happen again."

He said the problem is not so much what happens in Egypt but whether civil unrest expands to more prominent Middle Eastern oil nations. "You're seeing a dry run of sorts with unrest in countries like Tunisia and Egypt that are not big on the oil market," he said. "And you better watch close because the next one may be Algeria or Libya or God forbid Saudi Arabia." "And if that happens," he said, "you're really going to have a mess on your hands."

- Team Pickens
 
I'd say fears of SA falling are definitely not factored into the market.

I think smaller countries are more likely to fall first.

In anycase, even if SA royal family falls, it is not like the oil will stop flowing. Iran is still a very large producer, afterall. But temporary disruptions are likely.
 
Agreed. And yet the price of oil doesn't need an actual overthrow to provide chaos - just the fear of overthrow puts the market into defensive mode. Wheeeeee....
 
AndyH said:
And yet the price of oil doesn't need an actual overthrow to provide chaos - just the fear of overthrow puts the market into defensive mode. Wheeeeee....
Absolutely. As someone said - the price of any stock / commodity is a reflection of investor's greed & fear.
 
http://fivethirtyeight.blogs.nytimes.com/2011/01/31/egypt-oil-and-democracy/

If the theory holds, then governments like these — and not oil-rich ones like Libya, Algeria, or the states of the Arabian Peninsula — are more likely to be the next to fall.

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abasile said:
evnow said:
In anycase, even if SA royal family falls, it is not like the oil will stop flowing.
You're probably right. But I wouldn't put it past radical Islamists to sabotage oil infrastructure.
Or anyone else wanting to take advantage of widespread dislike for Islamists...
 
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