Due to concern that the rebellion in Egypt could engulf other Middle Eastern oil countries, the European benchmark Brent crude was slightly under $100 per barrel. On Monday, global shares also continued to decline.
Continuing protests raised European investors risk aversion which is already high due to the European sovereign debt situation coupled with inflation.
A dealer in the London Capital Group, Jonathan Sudaria, mentioned that “While Egypt’s importance to the global economy is limited; its importance oil transportation is huge.” He added that “Traders are concerned that, with already rising inflation and falling real incomes for consumers, a further rise in energy prices could really dampen any consumer confidence and prospects for growth.”
North Africa and the Middle East produces over a third of the world’s oil supply. Part of the fear is that a future Egyptian government will close the Suez Canal, preventing oil from getting to the west and damaging western economies.
The Egyptian revolution was inspired by the Tunisian government collapse. There are concerns that similar revolutions could overthrow other oil and gas rich countries.