NEW YORK (CNNMoney) — Oil prices neared $100 a barrel Tuesday, as traders feared tensions in Egypt could spread to the broader Middle East.
U.S. oil prices hovered around $99.50 a barrel Tuesday afternoon, the highest they’ve been in over a year.
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. Plus, the country is one of the largest and most powerful in the Middle East and North Africa — 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.
Protestors in Egypt have been demanding the country’s democratically elected, Islamist president step down, saying he has not governed the country in an inclusive manor. The protests are the largest the county has seen since the 2011 uprising that ousted longtime dictator Hosni 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.
“In my mind, it’s only a matter of time before crude breaks $100,” said Addison Armstrong, director of market research at Tradition Energy, an energy brokerage based in Stamford, Conn.
