Friday’s surge in oil prices due to the turmoil in Egypt and other parts of the Middle East was a wake-up call to the market that the economic ramifications could be wide reaching. The protests in Egypt represent the people’s cries for a more democratic nation. This is obviously a long-term positive and could have a wide ranging impact on the future of Middle Eastern politics and government, however, in the near-term this has the potential to disrupt a very fragile global economy.
The primary risk comes thru the potential for higher oil prices. There is no telling how long the turmoil in Egypt will last and whether or not it will spread to other regions. The risk here is that the uprisings will disrupt oil production and shipment in the Middle East. The WSJ elaborates:
“In the short term, the biggest global economic worry remains oil prices. Egypt itself isn’t a big energy producer. But significant shipments of oil and petroleum products pass through Egypt each day on their way from the Mideast to European and U.S. markets.
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