Brent crude continues heading higher

Fears over Middle East unrest have spooked oil traders, sending prices upwards.

Distressingly, the Egyptian political scene has again broken down into civil unrest and loss of life. Oil traders have reacted to this escalation in the North African country by forcing spot prices higher, as uncertainty increases. Egypt oversees access to the important transport route from the Mediterranean to the east via the Suez Canal, and any disruption to this flow would be felt directly by the commodity markets.

The biggest problem facing Egypt is that the two opinions on how best to run the country are very polarised.  While a proportion of people believe there should be a return to a stricter Islamic regime, others advocate a more liberal, western way of running the country. Unfortunately there is very little common ground between these two factions, and the clashes that result are leading to bloodshed. Egypt borders on a region that already has a fragile state of peace, and markets are watching closely for any signs of contagion in neighbouring countries.

Coinciding with the unrest has been a steady improvement in the global economic figures being released, hinting at a recovery across the board. When even the EU is officially out of recession then you know things are improving. This global improvement will undoubtedly see an increased demand for oil, as both consumers and manufacturers will be buoyed with confidence.

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