Attention, investors in energy stocks: The trouble in Egypt is affecting oil prices .
Investors are now concerned that the political unrest that has rocked Egypt for a week might disrupt the flow of oil through the Suez Canal. Another worry is the risk that the tensions might spread elsewhere in the oil-rich Middle East, as the protests in Egypt follow the collapse of the Tunisian government two weeks ago and have also touched Yemen and Jordan.
Shipping has so far proceeded normally through the 192-km (120-mile) Suez Canal, which Egypt controls, but port operations have slowed as protests have prevented supplies and staff from reaching docks. OPEC Secretary General Abdullah al-Badri said on Monday the group would boost oil supply in the event of a real shortage, but did not expect current unrest in Egypt to affect the Suez Canal or the Sumed pipeline oil flows.
Still, New York's main contract, light sweet crude for March, was up 76 cents at $90.10 (U.S.) a barrel. Benchmark Brent crude had come off slightly to trade down 0.4 percent at $98.93 a barrel, after hitting a 28-month high on Friday.
Money-market rates are also reflecting the unrest. Rates in developing nations are increasing at the fastest pace since 2008 as central banks from China to Brazil lift borrowing costs and banks hoard cash on concerns about stability in the Middle East, according to Bloomberg News. The yield on JPMorgan Chase & Co.'s ELMI+ Index of short- term debt in emerging markets rose to 2.5 percent on Jan. 28, from a record-low 1.74 percent on Dec. 31.
Moody's on Monday downgraded Egypt to Ba2 with a negative outlook on the back of the protests, citing a "far more uncertain outlook".
Protest-contagion fears and risk aversion pushed European shares lower again at the open, with the FTSEurofirst 300 down 1 percent. European investors are also worrying about their own sovereign debt crisis and inflation.
(If you have the appetite for more inflation-related reading, do we have a feast for you: - Inflation and its red-hot impact on your portfolio
- Inflation around the world
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- Euro zone January inflation jumps )
The MSCI world equity index and Thomson Reuters global stock index were also both down around 0.5 percent, while emerging stocks were down 1 percent.
Overnight in Asia, the Nikkei share average had ended down 1.2 percent while the MSCI Asia Pacific ex-Japan stock index fell 1.1 percent.
Among commodities, spot gold steadied after hitting an Egypt-fuelled eight-week high on Friday, while copper rose 1.1 percent and other base metals also gained on short-covering ahead of a week-long Chinese holiday.