Oil firm after spiking above $102
World oil prices crept higher on Wednesday, after spiking above $102 on the back of stubborn fears about political turmoil in Egypt and potential knock-on effects in the oil-rich Middle East.
Brent North Sea crude for delivery in March delivery rose by just three cents to $101.77 a barrel, one day after spiking to $102.08 -- which was the highest level since September 29, 2008.
New York's main contract, light sweet crude for March, firmed 18 cents to $90.95 a barrel.
The market had closed mixed Tuesday, after London's benchmark contract surged past $102 as investors worried about the impact of Egypt's unrest on global oil supplies.
Egyptian President Hosni Mubarak pledged on Tuesday that he would not stand for re-election later this year, in an address to the nation that came after eight days of anti-government demonstrations.
While Egypt is not a major crude producer, the country is home to the crucial Suez Canal, which carries about 2.4 million barrels of oil a day -- roughly equivalent to the daily output of Iraq or Brazil.
"It was once again events in Egypt that dominated headlines," wrote analysts at the Vienna-based JBC Energy consultancy in a note to clients.
"While Mubarak declared his intention to step down in September after the scheduled presidential elections, strong doubts exist that this measure alone will be enough to calm the demonstrations with most protesters calling for Mubarak's immediate resignation.
"Meanwhile, King Abdullah II's decision to replace Jordan's cabinet in reaction to public pressure reflects the potential for unrest to spread further through the region.
"As expected, countries with a low oil export income are most affected by the current political uncertainties."
Jordan's newly appointed Prime Minister Maruf Bakhit, meanwhile, will begin consultations on Wednesday about over formation of a new government charged with introducing general reforms in tune with the demands of popular protests.
The market has raced higher so far this week, crossing the psychological barrier of $100 on Monday for the first time in more than two years, on mounting fears over Egypt.
Investors are concerned that the kind of demonstrations seen in Egypt could spread elsewhere in the oil-rich Middle East. Protests in Tunisia have already seen the removal of the president there.
"Concern over the situation deteriorating in Egypt is easing... However, (the situation) will still be a background factor affecting oil prices at the moment," said Barclays Capital analyst Yu Yingxi.
© 2011 AFP