Brent crude rose on Tuesday, holding above $101 on fears that worsening turmoil in Egypt could disrupt supply flows through the strategic Suez Canal, analysts said.
Brent North Sea crude for delivery in March delivery climbed 38 cents to $101.39 a barrel one day after spiking to $101.73 — which was the highest level since September 29, 2008.
New York’s main contract, light sweet crude for March, slid 81 cents to $91.38 a barrel on Tuesday.
New York crude is vastly underperforming Brent owing to high levels of oil supplies at the Cushing depot in Oklahoma, according to analysts.
Brent prices meanwhile broke through the psychological $100 threshold Tuesday for the first time since the 2008 economic crisis, as mounting protests in Egypt demanded the removal of President Hosni Mubarak.
Egypt is not a major oil producer, but is home to the vitally important Suez Canal, which carries around 2.4 million barrels of oil a day — roughly equivalent to the daily output of Iraq or Brazil.
“Traders are pricing in the possibility of escalation of protests across the Middle East, so for as long as the unrest continues crude prices will remain well supported,” said Simon Denham, an analyst at trading group Capital Spreads.
“Brent finally broke through $100 and sits happily above there for now. Traders need to be aware though that commodities can pull back just as aggressively as they rise,” he added Tuesday.
Egyptians massed on Tuesday for the biggest day of anger yet in their unrelenting campaign to oust Mubarak, set to be a decisive test of their resolve in an eight-day revolt that is estimated to have already killed over 300.
Egypt has been engulfed in more than a week of street protests demanding and end to Mubarak’s 30-year rule.
Investors are concerned that similar demonstrations — which have also touched Tunisia, Yemen and Jordan — could spread elsewhere in the oil-rich Middle East.
“After the unrest in Tunisia and Egypt, there is still a high risk of the troubles spreading to neighbouring countries, including major North African oil producers Libya and Algeria,” said Commerzbank analyst Carsten Fritsch.
“Although the turmoil has not affected oil shipments so far, the geopolitical ‘risk premium’ is more likely to increase further.”
Barclays Capital analysts added in a report that “the probability for closure of the Suez Canal is extremely unlikely at the moment”.