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Suez Canal Concerns are Overblown: Shipping Analyst

Monday, 31 Jan 2011 | 1:39 PM ET

Concerns about supply disruptions in the Suez Canal are an "overreaction," Natasha Boyden, senior managing director and shipping analyst at Cantor Fitzgerald, told CNBC on Monday.

A Qatari gas tanker as its passes through the Suez Canal.
Getty Images
A Qatari gas tanker as its passes through the Suez Canal.

"The main thing to realize is that the canal is under military control. They're keeping a very close watch on what goes on there to make sure there are no disruptions to the canal," Boyden said.

As social unrest continues to reach new levels throughout Egypt, many shipping analysts are trying to determine whether there are any real threats to one of the world's most heavily used shipping routes.

"The main thing that will concern us is if we stop seeing military control of the canal and that would enable other factions to take over and start causing disruptions to the canal," she said.

"Although to be fair if there were disruptions that wouldn't necessarily be a bad thing for oil tankers because we would see a rate spike if the disruptions were to happen," Boyden said.

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"Egypt earned about 3.2 percent of its GDP from the canal, which was the third largest source of revenue for the country, so it's really not in its interest to have it closed down by any stretch of the imagination," she said.

Also, if they were to close the canal it would have diplomatic implications throughout the rest of the world because there are so many different countries that rely on the canal, Boyden said.

Middle East Turmoil
Middle East Turmoil

Despite that, most Middle Eastern oil does not go north through the Suez Canal, but rather goes east to China, she said.

"The eastbound route is seeing a lot more traction than the westbound route," Boyden said.

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