Crude oil spiked to $100 a barrel for the first time since 2008 on Monday, as traders priced in possible disruptions from Egypt's civil turmoil. Egypt is a mid-level oil producer that consumes about as much as it produces, but it controls two key oil routes: The Suez Canal and the 200-mile Suez-Mediterranean pipeline. While no disruptions have been reported so far, should traders be worried that the tumult in Egypt could spark an economically disastrous jump in global oil prices? (Watch a report about oil worries)
Egypt needs oil flowing more than we do: You "can invent any number of 'end of the world' scenarios that are very bad for the economy," says Evan Newmark in The Wall Street Journal. But the "truth is that Egypt and its people need stability much more than the world needs a stable Egypt." The crisis there could become "a source of distraction" for the White House and energy markets, but the country "just doesn’t have enough oil" to present a major risk to the global system.
"What the Egypt crisis means for your money"
"Oil Armageddon" won't happen: The global oil trade has a lot of Plan B's, and a closure of the Suez Canal would be a big annoyance but ultimately "no big deal," says Christopher Helman in Forbes. Oil would be rerouted, and stockpiles would tide us over during the delay. And even "if all else fails spectacularly and with duration," our strategic petroleum reserves have enough oil "for more than a year of rationed U.S. needs."
"Will Egypt's revolution mean oil Armageddon?"
The real "oil shock" will come if unrest spreads: Closing the Suez Canal "would not be as economically damaging as the original" Suez Crisis, in 1956-57, says James Hamilton in Econbrowser, but it would hurt. The "bigger worry for oil markets" would be if Egypt's turmoil starts to "spill over into other key oil-producing countries," like Iraq or Iran. "And should we see the temporary cessation of Saudi production, it would be an event without historical parallel."
"Geopolitical unrest and world oil markets"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- After Ferguson: Stop deferring to the cops
- Ferguson riots were terrible — but this racist reaction was worse
- 43 TV shows to watch in 2014
- The hilarious hypocrisy of Republicans complaining about the imperial presidency
- Is it now OK to have sex with animals?
- Don't argue about politics this Thanksgiving. Just don't.
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Alien conspiracy theorists think the government is on the verge of spilling big secrets
- 7 grammar rules you really should pay attention to
- In Ferguson, Michael Brown lost his life — and America's police lost the benefit of the doubt
Subscribe to the Week