U.S crude future above $89 on monday, recovering from a near 2 per cent drop in the previous session, supported by the political crisis in egypt and a drop in the U.S unemployment rate to a 21- month low.
The oil prices buoyed by comments made by the OPEC members at the weekend, kuwait said oil prices could exceed $110 a barrel if egypt unrest continues and venezuela said prices could more than double to $200 a barrel if the Suez canal closed. Iran on the other hand the rotating Opec president said there was no need for an emergency meeting even if prices hit $120.
Due to the reports of president Hosni Mubarak stepping down, oil prices went off speculation causing a 2% fall on friday.
Opposition including the muslim brotherhood had talks with the government to resolve egypt's political crisis but said the core demand of removal of president demonstrators in central tahir square continue their protest to a 12 day battle to reinforce the removal ofthe president.
The matter really of concern of traders is the closing of Suez canal causing a cut in supply of oil increasing prices. Even with the low unemployment levels sustaining, the $90 a barrel would hurt the economies recovery.
This is a large concern for major consumers, as the issue may spread to larger oil producers causing a sharp rise in prices.
Economies would have to resolve to alternatives to oil to sustain the uncertainity of oil prices.
Taha Qureshi
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