Middle East unrest leads to surging oil prices
Oil prices surged Friday as concerns mounted that anti-government protests in Tunisia, Egypt, Lebanon and Yemen could spread to some of the Middle East's biggest oil producers. Analysts said that the protests could push oil prices to $130 a barrel quickly if that happens.
In Egypt, President Hosni Mubarak sent regular army troops and armored cars onto the streets of Cairo and other cities in an attempt to quell mounting violence and mass protests against his 30-year regime. Mubarak also ordered curfews in all Egyptian cities even as demonstrators ignored the moves and remained on the streets.
The protests sent crude oil futures for March delivery up by $3.70, or 4.3%, to $89.34 a barrel on the New York Mercantile Exchange. Analysts said that traders were busy buying up oil in case the anti-government sentiment spread and disrupted production.
"People are concerned that this could change the face of the Middle East, and no one knows what direction that might take. Will it be liberal and democratic or will it be fundamentalist and Islamic?" said Phil Flynn, an oil analyst with PFGBest Research in Chicago.
Flynn said that the protests were threatening to move oil out of its most recent trading range of $85 a barrel to $95 a barrel.
Fadel Gheit, senior oil analyst for Oppenheimer and Co. in New York, said that oil prices are already inflated by at least $10 a barrel to $15 a barrel and that futures could rise to $120 a barrel to $130 a barrel if there were similar uprisings in a country such as Saudi Arabia, the world's biggest oil producer.
"It's beginning to look like the fall of the Soviet Union. If it all ends peacefully, prices will come back down, but no one knows what will happen next," Gheit said.
-- Ronald D. White