Egypt Concern Drives Oil Higher
CNBC Executive News Editor
Oil prices are now reflecting concern about uprisings in Egypt, after ignoring the unrest earlier in the week. Crude was up more than 4 percent at midday.
Here are some thoughts from oil analyst John Kilduff of Again Capital:
The geopolitical premium is rushing back into oil prices now on the Egypt situation. The market had reacted to it mildly the past couple of days, but today's escalation has snapped the markets to attention. Restrictions on El Baradei's movements, suspension of cell phone service, military assets in Cairo square, ruling party headquarters on fire, Mubarack speech, etc. — the situation is intense.
The implications are regional, especially coming on the heels of Tunisia. Hezbollah's victory in Lebanon was also disconcerting as it represented a victory for Iran. It's hard to imagine a scenario where regime change in any of the potential countries is a good outcome for the United States and western interests. In the case of Egypt, the US can only hope that El Baradei takes power and not the Muslim Brotherhood. It certainly will make the neighborhood more unsettled for Israel.
Several countries from Saudi Arabia to Libya have a similar long-time autocratic ruler and the same economic conditions — high unemployment and rising prices. But in those cases, there are a lot more petro-dollars to spread around to placate the masses.
The other big concern here: Yemen. Sitting on Saudi Arabia's southern flank with an Al Qaeda presence. The implications are obvious. The protests have not been as great, but the current President has been cooperating with the US.
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