What can politely be called political unrest in Egypt has helped set the tone of markets around the world this week. Former President Mohammed Morsi and hundreds of decisions makers within the Muslim Brotherhood have been removed from power by the Egyptian army following massive protests, and Adly Mansour, the nation’s top judge, has been sworn in to power until new elections are held.
Reports indicate that the Egyptian army has declared a state of emergency in the Suez and South Sinai regions following an armed attack on al-Arish airport. Fringe religious groups have reportedly threatened retaliation for Morsy’s overthrow, and the political and economic stability of the region is hardly clear.
One of the most obvious impacts on the global markets of the turmoil so far is on oil, which has shot up in price over the past few days.
On Friday morning, the price of WTI crude oil had climbed to nearly $102 per barrel, while Brent crude climbed over $106.5 per barrel. At near 14-month highs, uncertainty in Egypt has inflated prices well above what some economists think is a more realistic price of between $90 and $95 per barrel.
Data compiled by Bloomberg show that as 11 large crude carriers with as much as 22 million barrels of oil on board were headed toward Egypt as of Friday morning. The move has catalyzed speculation that crude oil from the Middle East may be making its way to Europe as a result of rising prices, particularly from Russia.