Oil rises as unrest in Egypt stokes fears over supply

Brent crude held steady above $110 a barrel on Monday, after posting its biggest weekly percentage gain last week since the first half of July, as unrest in Egypt stoked fears over oil supply security in the Middle East. But investors remained cautious as they awaited more clues on when the United States, the world’s largest oil consumer, will begin trimming its monetary stimulus.

Brent crude oil futures for October delivery had slipped 14 cents to $110.26 a barrel by 06.51am. Brent hit a four-month high of $111.53 on Thursday on fears that violence in Cairo could affect the Suez Canal, a major oil conduit. US oil for September delivery fell 16 cents to $107.30.

“A lot of the focus is still on the rising tensions in Egypt and what that’s going to do to the supply of oil,” said Ben Le Brun, an analyst at OptionsXpress in Sydney. “Playing second fiddle to that is some guess work surrounding the potential for tapering of the current quantitative easing programme in the US,” he said.

Civil unrest in both Egypt and Libya supported prices. Egypt is not a major oil producer, but investors are wary that the unrest there could spread through the Middle East, which pumps more than a third of the world's oil. Egypt's Muslim Brotherhood has accused security forces of killing dozens of detained Islamists, upping the pressure in a crisis that has rocked the Arab world's most populous state. At least 850 people have died since Wednesday in clashes pitting the followers of deposed Islamist President Mohamed Mursi against the army-backed government.

In addition, Libya’s oil production and exports have been crippled by violence and strikes, pushing exports to the lowest level since the 2011 civil war. The country’s largest refinery has reinstated some oil product exports.

Easing some supply fears, crude resumed flowing through a pipeline from Iraq’s Kirkuk oil fields to Turkey’s Mediterranean port of Ceyhan, Iraqi oil officials said on Sunday. The flow was halted on Friday after a bomb attack near the northern city of Mosul, according to officials.

Reuters