Nervous eyes on the Suez Canal as Egyptian unrest hits world economy
Egypt’s political turmoil has left traders nervous, pushing oil and gold prices up and sending Asian stock markets down as concerns mount that the unrest will affect trade through the Suez Canal, a vital shipping route.
AP – Oil prices closed in on the $100 a barrel mark on Monday as traders grew increasingly worried about unrest in Egypt, while stock markets in Asia mostly fell.
Revenue from Egypt‘s Suez Canal dropped 1.6 percent to $416.6 million in January from $423.4 million in December but was up 8.6 percent from a year earlier, a state website showed on Wednesday.
Egyptian officials have said the Suez Canal–a barometer of world trade–has not been affected by the political turmoil in Egypt in recent weeks as protests continue across the country demanding that President Hosni Mubarak step down.
Rising global oil prices and the government’s commitment to maintain the waterway’s traffic have supported the canal’s revenues, an economist said on Wednesday.
“The increase in oil prices … further reiterates the importance of the Suez Canal as a more economic route for vessels to take rather than longer routes,” said Mohamed Rahmy, economist at Beltone Financial.
U.S. oil climbed above $87.20 a barrel on Wednesday, led by strong performances in the global stock markets and a surprise draw down in crude inventories in the world’s top oil consumer.
“Throughout the events of the past 15 days, the government has reiterated its commitment to protect the Suez Canal and to ensure that traffic would continue uninterrupted,” Rahmy said.
“There isn’t a reason why the Suez Canal would be affected by these (political) events,” said Rahmy adding that any disruptions in port activity in Egypt would not have a direct link to the canal’s operations.
A senior official said on Tuesday that strikes by workers in companies in the Suez Canal zone would not affect Suez Canal operations and movement of ships. Around 3,000 workers in companies owned by the Canal authorities and based in Ismailia and Suez went on strike on Tuesday over pay and conditions.
The Suez Canal is a vital source of foreign currency in Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.
Egypt’s Prime Minister Ahmed Shafiq said on Thursday the canal was operating normally despite the unrest in Egypt.