Oil prices have spiked due to tension in Egypt. Brent crude hit $100 per barrel for the first time since 2008 on fears instability could spread through the Middle East, which together with North Africa pumps over a third of the world's oil.
"I expect oil prices to reach $110 during the first half of 2011, however, it could go above that level if Egypt's current crisis continues," Imad al-Atiqi, a member of the OPEC member's highest oil policy body, told Reuters in a telephone interview.
"A huge amount of oil passes through the Suez Canal and the country's stability is essential for the Middle East's stability, particularly Israel," he said.
Egypt is a small oil and gas exporter and the main danger of the unrest is seen as the closure of the Suez Canal or the Suez-Mediterranean (SUMED) oil pipeline which passes near Cairo.
The canal ships 1.5 million barrels per day (bpd) of crude and the pipeline carries 1 million bpd. Together they account for nearly 3 percent of daily global oil demand.
On Thursday, Egypt's Prime Minister Ahmed Shafiq said the Suez Canal was operating normally despite the unrest.
Some oil-focused bankers and fund managers say that even if unrest in Egypt cuts flows along the strategic pipeline and the Suez Canal, the oil price spike would likely be short-lived and flows would resume quickly, regardless of whoever is in power.
OPEC members are comfortable with an oil price ranging between $90 to $100 a barrel, Atiqi said, adding the group could meet before their scheduled meeting in June if prices continued rising quickly above $110 a barrel.
OPEC ministers and consumers will discuss oil output policy on the sidelines of an international energy conference in Saudi Arabia on February 22, but a formal decision there was unlikely, the OPEC secretary general had said.
OPEC says it has spare capacity of 6 million barrels to meet lost output but would do it only when it sees a shortage in the market rather than speculator-driven rallies.
(Reporting by Kuwait newsroom; Editing by Rania El Gamal; Editing by David Holmes)
Copyright 2010 Thomson Reuters. Click for Restrictions.
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