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20 June 2024

Oil price hits $102, slips later

London's benchmark contract had surged past $102 on Tuesday (FILE)


Brent crude prices eased here on Wednesday, one day after spiking above $102 on stubborn fears about political turmoil in Egypt and potential knock-on effects in the oil-rich Middle East.

Brent North Sea crude for delivery in March delivery dipped ten cents to $101.64 a barrel after reaching $102.08 on Tuesday -- the highest level since September 29, 2008.

New York's main contract, light sweet crude for March, handed back 12 cents to $90.65 a barrel.

London's benchmark contract had surged past $102 on Tuesday as investors worried about the impact of Egypt's unrest on global oil supplies.

New York crude is vastly underperforming Brent owing to high levels of oil supplies at the Cushing depot in Oklahoma, according to analysts.

Later Wednesday, traders will digest the latest snapshot of energy inventories in the United States, which is the world's biggest oil-consuming nation.

In Egypt, President Hosni Mubarak on Tuesday pledged that he would not stand for re-election later this year, in an address to the nation that came after eight days of anti-government demonstrations.

"The news that Egyptian President Hosni Mubarak will not step down until elections planned for September helped underpin Brent prices," said analyst David Hart at Westhouse Securities in London.

While Egypt is not a major crude producer, the country is home to the crucial Suez Canal, which carries about 2.4 million barrels of oil a day -- roughly equivalent to the daily output of Iraq or Brazil.

"It was once again events in Egypt that dominated headlines," wrote analysts at the Vienna-based JBC Energy consultancy in a note to clients.

"While Mubarak declared his intention to step down in September after the scheduled presidential elections, strong doubts exist that this measure alone will be enough to calm the demonstrations with most protesters calling for Mubarak's immediate resignation.

Brent crossed the psychological barrier of $100 on Monday for the first time in more than two years, on mounting fears over Egypt.