Oil prices neared $100 a barrel Tuesday, as traders feared
tensions in Egypt could spread to the broader Middle East.
U.S. oil closed at
$99.63 a barrel Tuesday afternoon, the highest they've been in over a year. The
spike in prices is a result of the unrest in Egypt.
While oil production from Egypt is negligible, the country
controls the Suez Canal and pipeline, which move about 4 million barrels of oil
per day. Additionally, the country is one of the largest and most powerful in
the Middle East and North Africa which is home to about a third of the world's
oil production.
"The fear of contagion in the Middle East to major oil
producers is the ultimate concern," Matt Smith, a commodities analyst at
Summit Energy in Louisville, KY, wrote in a research note Tuesday.
Protests in Egypt have surrounded the current leadership,
which was democratically elected after the 2011 uprising against Hosni Mubarak.
Protesters are demanding that Mohammed Morsi, the Islamist president, step down, saying
he has not governed the country in an inclusive manner. The protests are the
largest the county has seen since the 2011 uprising that ousted longtime ruler Mubarak.
Seven people have died in the protests, and the Egyptian
military has given the president 48 hours to resolve the dispute. Some have
hinted there may be a coup, though it's uncertain what actions the military
will take. That deadline approaches Wednesday night.
Oil prices have risen about 16% in the last two months.
Traders cite an improving economy,
rising demand for crude oil from refiners in the United States, and problems
getting supplies of light, sweet crude to market as other reasons for the price
run up.