If We Can Control The Egypt Situation…Oil Prices Can Be ContainedBy Lisa Adams on February 5, 2011, 5:08 pm
International Energy agency stated that the surge in oil prices to over $100 per barrel is high enough to “derail” the strides made in the global economic recovery. Globally, countries are putting pressure on OPEC to increase its exports in order to drive prices down. OPEC is due to meet on June 2, 2011 to review its daily quota, and in the nearer term, many of OPEC ministers will gather in Riyadh, Saudi Arabia on February 22, 2011 at the International Energy Forum. The results of these meetings will in large part determine the stability or volatility of the oil market.
Not A Big Economic Event
“I don’t necessarily think it’s that big an economic event,” Santoli replied to Jarvis. “It’s obviously a diplomatic and a humanitarian issue before it’s an economic one. Egypt, frankly, is just not that big an economy. They’re not, let’s remember, an oil exporter, a net exporter. So, I do think it’s something that we would be concerned about, mostly because of the regional implications. If it really did mean kind of a tide turning away from democracy, or away from stable governments in that region, I do think it would be an issue.
Must Be Contained In Egypt
“If the turmoil is contained largely to Egypt, then the broader economic fallout will be marginal,” Mark Zandi, chief economist at Moody’s Analytics, told the Associated Press. “Now, obviously, if it spills out of Egypt to other parts of the Middle East, the concern goes to a whole other darker level.”
Suez Canal Controlled By Egypt
Nearly 3 million barrels of oil transit daily through the Suez Canal controlled by Egypt, largely headed to the US. It is in the US and Egyptian national interests to keep both oil and food transiting securely through the canal, and a military intervention may be necessary to take over, secure and operate the Suez Canal.