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Risks to Suez Canal Bumps Oil Prices

January 29, 2011

EPOCH Times reports this evening: Fears that the busy Suez Canal waterway would be shut down amid social strife in Egypt ramped up stocks of tanker owners and pushed up oil prices near $100 a barrel on Friday.

Unrest in Suez, one of Egypt’s largest cities in terms of population, as well as Cairo and Alexandria sparked concerns that the canal would be closed. Investors were gambling that, in such an event, demand for oil and tankers would skyrocket.

Stocks of Frontline Ltd. (FRO), the world’s largest operator of oil tankers, leapt nearly 8 percent ($1.94) to $27.12 in Friday trading on the NYSE.

General Maritime Corp. (GMR, NYSE) shares jumped 10 percent (30 cents) to $3.22 while Overseas Shipholding Group Inc. (OSG, NYSE) stock gained 6 percent ($1.95) to close at $34.40.

Oil prices also edged up on Friday. March futures for light sweet crude on the New York Mercantile Exchange closed $3.85 higher at $89.49.

If this thing spreads across the North African continent, gets into Libya, Algeria, then you’ve got trouble,” The Schork Report energy newsletter editor Stephen Schork told the Wall Street Journal.

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