Suez Canal strike may ignite oil price: Obama Sends Aircraft Carriers

02-09-2011 • commodityonline.com

Giving more momentum to anti Mubarak protests in Egypt, thousands of Suez Canal service workers began an indefinite strike threatening crude oil supply disruptions. According to Egyptian daily Al Ahram, 6,000 workers in Suez, Port Said and Ismailia had begun an indefinite strike and sit-in in protest against poor wages and deteriorating health and working conditions. However, the report said it was not linked with protests in Cairo. The Suez Canal is a vital source of foreign currency in Egypt, along with tourism. But the news could alarm markets and European policymakers alike, and will likely to be welcomed by pro-democracy activists in Cairo's Tahrir Square. The US Energy Department classifies the Suez Canal as one of a handful of World Oil Transit Chokepoints and events there can have a disproportionate effect on oil prices, which last week hit $100 a barrel on fears that the Canal could be hit by protests. Roughly four million barrels of oil pass through Egypt's Suez Canal by tanker and pipeline traffic every day. Roughly eight percent of the entire world's seaborne trade and 2.6% of global production passes through the Canal, which at its narrowest is only 1,000 feet wide.