Brent oil prices rose on Tuesday, pushing above $102 a barrel as disruptions at Egyptian ports and Jordan's government shake up kept concerns about unrest in the region and the potential for oil supply interruptions in focus. US crude prices fell in choppy trading ahead of weekly reports expected to show domestic crude inventories rose last week and on the perception that the Brent market was more vulnerable to any immediate supply disruption.
The US price slide left the benchmark West Texas Intermediate's discount to Brent at more than $10 a barrel. It reached a near record above $12 last week. The dollar's weakness supported dollar-denominated oil prices, with the euro extending gains to reach a two-and-half month high against the greenback, as risk appetites improved after strong US and euro zone manufacturing data.
In London, ICE Brent crude for March rose 73 cents to settle at $101.74 a barrel, off its earlier $102.08 peak. US crude oil for March delivery fell $1.42 to settle at $90.77 a barrel after soaring more than $6 in the previous two sessions. Shipping sources said there were major disruptions in Egypt's Alexandria and Damietta ports due to staff shortages and an absence of customs officials.
Egypt control's two major oil transit points, the Suez canal and the SUMED pipeline, that brings oil from the Red Sea to the Mediterranean, have not been affected by the protests, but the disruptions at the ports to the west highlighted the potential for problems. At least 1 million Egyptians took to the Cairo streets to protest, with other mass anti-government rallies being staged in other key cities.
King Abdullah of Jordan replaced his prime minister after protests over food prices and poor living conditions, adding to the concerns about the region. "Geopolitics is at the forefront of the sentiment at the moment. And while we don't expect (oil) transit to be impacted, the news of the port disruptions brings up the what-if?," said Amrita Sen, oil analyst at Barclays. The International Energy Agency said the oil market does not face any emergency, but called on Opec to remain "flexible" in the event unrest affects supply.
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