Investment bankers, Renaissance Capital, are claiming that political instability in North Eastern Africa is having a disruptive effect on the price of crude oil. The West Texas Intermediate closed at 4.3% on 28 January.
Although Egypt’s share of global oil and gas production is only 1% and 2% respectively, Renaissance claim the biggest risk is the possibility of wide-spread violence in the Middle East and North and Africa. Some are saying that instability in the region could spread through other countries such as Tunisia, Syria and Jordan, leading to reduced production and therefore higher prices.
In the long run, analysts from Renaissance think such a scenario could create a downward market, affecting growth of the world’s economy.
Renaissance Capital focus on emerging markets in Russia, Ukraine, Kazakhstan and sub-Saharan Africa.