Global Arab Network | Russia: Egypt Crisis Drive Oil Prices Towards $ 120

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Russia: Egypt Crisis Drive Oil Prices Towards $ 120

Global Arab Network - - Reda Darwish

Friday, 04 February 2011 22:47

Russia (Moscow) - The crisis in Egypt poses no real threat to oil transit via the Suez Canal, but can push up oil prices as high as 120 US dollars per barrel, according to head of the Russian Gas Society and State Duma deputy speaker Valery Yazev. "The current rise up to 100 dollars per barrel is no fundamental price and no result of the demand and supply balance. It is situational," he told Russian news agency (Itar-Tass) before leaving to attend the 47th security conference in Munich.

He said the danger of oil transit disruption through the Suez Canal "is hypothetical and potential, but there are no real grounds for that" as Egypt realizes the consequences of such an option.

Yazev said "international legal mechanisms and strict global rules for oil transportation and sea route protection shall be designed" to avert such threats.

He said the planned Nabucco gas pipeline, which is to go through northern Iraq populated by Kurds, may face a similar situation.

"Such critical zones shall be under international cover. This is a legal issue. Besides, it might be necessary to create certain reserves of energy carriers against such risks. Russia has advanced its initiatives, but so far they meet no understanding in the European Union which is sticking to the Energy Charter, which is objectively outdated now," Yazev said.

Oil prices will depend on the duration of the political crisis in Egypt and the situation in other critical places for global energy security. "I believe the United States may begin to replenish oil reserves," he said adding all the factors may push the price up to 120 dollars.

Global Arab Network

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