Tag: Egypt

Israel may be considering its energy options after a pipeline bringing gas from Egypt suffered four attacks in the space of five months.

This link provides Israel with 40 per cent of its gas and the most recent explosion, which took place at a monitoring station near the Egyptian town of Al-Arish, was the second incident in as many weeks.

Oil prices jumped above $103 a barrel for Brent crude on Thursday amid the latest violent clashes in Egypt between pro-democracy protestors and supporters of embattled president Hosni Mubarak.

The price is now over 8 per cent higher than before the turmoil started last week – a clear sign of concern but not of panic. Yes, the Suez canal is a vital supply line. And yes, there are some risks of contagion to the big oil exporters. But investors seem to be holding their nerve.

The protests rocking ruling regimes in the Middle East have raised concerns – especially in the energy sector – about whether they will spread to Saudi Arabia, the world’s largest oil exporter.

The kingdom, the Arab world’s biggest economy, is grappling with similar issues to Egypt, albeit on a much smaller scale: a growing young population, nearly one third of whom are between the age of 15 and 30; an official unemployment rate of 10 per cent; rising inflation; and a shrinking middle class. But will the kingdom be the next to be shaken? Unlikely.

Western and Saudi analysts do not expect Egypt’s experience to be repeated in a country that has only been experimenting with freedom of expression since 2005 when King Abdullah came to power.

Kiran Stacey

Much has been made of the nervousness with which Israel is watching events in Egypt. The peace treaty signed between the two countries in 1979 makes the relationship one of the most important regional alliances for Israel in the region, and Israel fears that a revolution could see the Egyptian government fall into the hands of Islamic fundamentalists.

David Blair

Egypt may not be among the Middle East’s significant oil producers, but the country’s turmoil has placed upward pressure on oil prices nonetheless.

The most important explanation is the market’s fear that Egypt’s revolution may spread to the rest of the region. But there is also a secondary concern about the security of important transit routes across Egyptian territory.

The Suez Canal is not as important for crude oil supplies as might be thought. According the most recent figures available from the Suez Canal Authority, only 573,000 barrels per day passed through the Canal in 2009, less than half the figure for 2006.

Speculation about the potential closure of the Suez canal is mounting on Friday, probably the reason that WTI prices are heading higher.

Notably, prices of Brent crude (which is not continent-blocked; it comes from the North Sea and doesn’t tend to get transported through the Suez canal) are not climbing.

Sylvia Pfeifer

BP marked a return to the deep water today – in Africa.

Seven months after its accident in the deep waters of the Gulf of Mexico, the UK oil group announced it has made a significant discovery in the deepwater West Nile Delta area in Egypt.

The Hodoa discovery – Hodoa means ‘horseshoe’ – is located in the West Mediterranean Deepwater, some 80km northwest of Alexandria. The WMDW-7 well was drilled to a depth of 6350m and is the first Oligocene Deep Water discovery in the West Nile Delta area.

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