LONDON — Oil slipped from a two-week high above $106 a barrel yesterday after Egypt’s armed forces toppled its President, easing concerns over the threat of supply disruption in the Middle East.
The Suez canal, a vital waterway for oil shipments, was not affected by the unrest, but analysts said real and threatened supply disruptions in the Middle East, which pumps a third of the world’s oil, and in other regions would support prices.
“It is too early to say that the situation has calmed down, but the safe operation of the Suez, which is in the interest of both Persian Gulf countries and oil-consuming nations, seems to be guaranteed,” Tamas Varga, an analyst at oil brokers PVM, said.
Brent crude fell 82c to $104,94 a barrel by lunchtime yesterday after rising as high as $106,03 on Wednesday. US crude slipped 48c to $100,76, falling from a 14-month peak of $102,18 earlier.
Besides the perceived risks to Middle East supply due to tension in Egypt, disruption to exports in Libya and Iraq and relatively scarce supply of Russian crude into the Mediterranean have tightened physical oil flows.
“It is still too early to sound the all-clear,” Carsten Fritsch, an analyst at Commerzbank in Frankfurt, said.
“Supply risks are likely to lend continued support to oil prices.”
In addition to concerns about Middle East supplies, the US benchmark received a boost when a weekly inventory report showed stockpiles fell by more than 10 million barrels, the biggest drop for the time of year since 2000.