How does Egypt's stock market and economy affect the United States?

[Raschel]

[chelsea0011]

1. It's all about the oil....in particular, the Suez Canal

[Davis_X_Machina]

4. Oil doesn't go through the Canal in significant quantities any more...

...the tankers are too big.

Almost 35,000 ships transited the Suez Canal in 2009, of which about 10 percent were petroleum tankers. With only 1,000 feet at its narrowest point, the Canal is unable to handle the VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers) class crude oil tankers.

1/70th or so of world daily production. Double that for the Red-Sea-Mediterranean pipeline.

[old mark]

2. AS of this morning, oil prices are going up to near $90/barrel, and stocks

have gond down Friday because of "uncertainty"...I think the oil folks use every possible excuse to raise prices and I think much of the decline in the stock market is from profit taking as the market went UP quite a bit after the SOTU speech...but the blame is assigned to Egypt and Middle East unrest...


mark

[Raschel]

3. Thanks for your replies. I'm looking ahead and wondering how different leadership scenarios in Egypt

could affect our economy.

[old mark]

7. Who controls Egypt controls oil flow, and has GREAT influence over most of that region.

Egypt has a very large military for its size, with some US and some Russian equipment.

mark

[Davis_X_Machina]

8. Who controls the Straits of Hormuz...

...controls oil flow. 20% of it. Suez, even with its pipeline, is, maybe a tenth of that.

The canal was shut altogether from 1967 to 1975. This is the very thing that spurred the development of the present generation of very-large, and ultra-large tankers, of which there is a considerable oversupply right now.

If the canal and pipeline were both closed, you'd see a spike in prices to be sure -- transport costs -- but one at its largest still smaller, perhaps far smaller, than various purely speculative run-ups in the recent past.

It's not 1965 any more.

[Raschel]

9. I can see that the concern would be the continued spread of unrest or uncertainty of power.

[Davis_X_Machina]

10. The Emirates, Kuwait, and/or Saudi would have to be involved...

...and involved in such a way that their oil would go off the world market. What progressive forces that exist in those countries have exactly the same need, perhaps even more need, for oil revenues, and the regimes presently in power there have no motive except spite to destroy the infrastructure required to move them.

They've already bought their escape hatches in Switzerland, or wherever.

Speculation, not actual supply disruption, will turn out to explain any oil shock coming from these events. I don't expect one.

[leveymg]

5. Practically not at all. It's the Israelis who are spooked by overthrow of the dictatorship.

Aside from the Suez Canal and oil shipments, which would likely stay open regardless of any regime change, the U.S. has few direct interests or FDI in Egypt.

The Israelis fear the Egyptian military and hate the idea of an Egyptian government with policies that more accurately reflect public opinion. This really throws a wrench into their plan to use an engineered Lebanese crisis to intervene in Lebanon and in Gaza.

[hack89]

6. Suez canal.. nt