Brent oil strikes two-year peak above $104 per barrel

14th February 2011, Comments 0 comments

Brent crude oil prices surged beyond $104 per barrel on Monday, hitting the highest levels for more than two years on growing concern that Egypt-style unrest could spread in the Middle East, traders said.

In late afternoon deals, Brent North Sea crude for delivery in April soared to $104.30, the highest level since September 25, 2008. It later stood at $104.05, up $3.11 from Friday's closing level.

New York's main contract, light sweet crude for March delivery, added ten cents to $85.68.

Brent prices were supported by supply concerns in the Middle East as demonstrators in various Arab states drew inspiration from Egyptian president Hosni Mubarak's resignation on Friday, analysts said.

However, the price of New York crude, more commonly known as West Texas Intermediate (WTI), continued to lag Brent due to abundant US energy supplies.

"The oil markets will continue to remain jittery until stability returns to Egypt and there is some certainty over what happens next in terms of the running of the country," said analyst Rebecca Seabury at UK consultancy Inenco.

"The markets will be worried about the risk of unrest spreading within the region -- following the Egyptian example.

"They will be looking to be reassured that the region will remain stable over the coming weeks and months and oil prices could continue to move towards $110 a barrel until this happens, particularly when other factors such as a weak dollar, greater global demand and tighter supplies are taken into consideration."

Mubarak, in power for three decades before quitting last week, was the second scalp claimed by pro-democracy protests following that of Tunisian president Zine El Abidine Ben Ali, who left office in January after 23 years.

Leaders throughout the Arab world have been monitoring events in the two countries closely.

"Egypt's state of transition will be difficult, but it is the reports of simmering unrest in key oil exporter Iran as well as regular protests in Algeria, Bahrain, and Yemen that are of more direct concern to the oil market," said analysts at US investment bank JP Morgan in a note to clients.

In Algeria, hundreds of stone-throwing demonstrators clashed with police in the eastern city of Annaba on Sunday while the opposition have announced another major anti-government rally next weekend.

In Yemen, rocks and batons flew in central Sanaa on Monday as pro-democracy protesters clashed violently with police and supporters of President Ali Abdullah Saleh, witnesses said.

In Bahrain, police used tear gas to disperse dozens of protesters Monday in the eastern village of Nuwaidrat, police said, as security forces deployed in the tiny Gulf kingdom following Facebook calls for a February 14 "revolt."

And across in Iran, riot police fired tear gas and shot paintballs at protesters staging anti-government demonstrations in Tehran under the pretext of rallies supporting Arab uprisings, websites and witnesses said.

"The unrest in Iran has worsened as demonstrators and security forces clashed today," added Seabury at Inenco.

"The fear of a political uprising has spooked the oil markets, more so as Iran (is) the current president of the Organisation of Petroleum Exporting Countries."


© 2011 AFP

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