The crisis in Egypt is doing wonders for the price of oil. As demonstrators filled the streets of Cairo, the price of Brent crude hit $100 a barrel, its highest level for two years.However, it would be misleading to think that the political crises in North Africa is the main driver behind the recent spike in oil prices. The crisis has helped over the last month or so, but the market has been trending upwards since the summer.
Cheap money, lots of speculation and a growing expectations of inflation - these are the factors driving the price of oil higher.
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There's more than one price for oil. Brent crude is the price of North Sea oil, which thanks to the complexities of the global market the UK doesn't consume much of.
WTI & NYMEX are still trading around the high 80's low 90's.
The recent blip in prices due to Egypt is probably just speculation that the civil unrest will spill out into other middle eastern states (very unlikely).
The other factor that has people spooked about Egypt is yet another oil production nation has become a net oil importer and now consumes more oil than they export.
Cheap money, lots of speculation and a growing expectations of inflation - these are the factors driving the price of oil higher.
Cheap money - No, too high risk
Lots of speculators - No, small number of very high risk speculators
Inflation expectations - No, supply shortfall expectations
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