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Tuesday, February 15, 2011

Implications of Egypt’s Turmoil on Global Oil and Natural Gas Supply

Michael Ratner
Analyst in Energy Policy

The change in Egypt’s government will likely not have a significant direct impact on the global oil and natural gas markets. There may be some short-term movements in price, mostly caused by perceived instability in the market place, but these would most likely be temporary. However, prolonged instability that raises the specter of spreading to other oil and natural gas producers in the region would likely add to upward price pressures. Although Egypt is considered an energy producer or net exporter overall, its oil and natural gas exports are not large enough to affect regional or global prices. The most serious impact would be on regional recipients of its natural gas exports.

Egypt’s main influence on energy markets is its control of the Suez Canal and the Suez- Mediterranean oil pipeline (SUMED). The current low utilization of these two pieces of infrastructure would likely limit any affect of their closure in the near term. Both the oil and natural gas industry would, over time, find alternative routes to circumvent the canal and pipeline if necessary.

Date of Report: February 11, 2011
Number of Pages: 9
Order Number: R41632
Price: $19.95

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