Friday, 11 February 2011 07:39

Written by Julius

Battering stock markets, surge in oil prices and a slowdown in global economy are expected as popular movements in Tunisia, Algeria, Jordan, Yemen, Lebanon and now Egypt, sparked, causing internal political instability. The fact that these countries belong to Middle Eastern and North African regions, where most large oil producers could be found, further reinforces the expectations by analysts that the effects of these civil unrests would reverberate around the world.

The week following the widespread Egyptian uprising, benchmark oil prices rose by $3.70 or 4.3 percent, settling at $89.34 per barrel on the New York Mercantile Exchange. Oil futures trading in Asia also soared by 87 cents of 1%, at $90.21 per barrel.

As expected, the Egyptian stock market suffered serious financial setbacks, with shares falling down by 17% after the weekend's closing. But the effects of Egyptian turmoil also manifested in the neighboring important economies, with Dubai and Oman stock markets falling down by 4.3% and 3%, respectively. Saudi Arabia also reeled from the political crisis, with its stock market falling down 2.5%, after a 6% slide over the weekend.

Analysts fear that if the political tensions continued and spread over the Middle Eastern and North African regions, the subsequent and sustained increase in oil prices would slow down global recovery. Several European economies that were badly hit by the recession could suffer contraction, not to mention that the continuing effects of the global downturn are still felt.

The civil unrest in Egypt began after thousands of demonstrators gathered in the main streets of Cairo and Alexandria to call for the resignation of the Egyptian President Hosni Mubarak. Protesters also demand economic and political reforms.

The widespread uprising could continue over weekend, as Mubarak still has not resigned, but instead fired his whole Cabinet and installed a new prime minister and vice president.

Friday, 11 February 2011 07:35

Written by Julius

The adage that popular uprisings, especially in economically and politically important states, could spell negative effect on the global economy is once again proven true as stock markets battered and oil prices surged following the turmoil in Egypt.

Days following the political unrest saw the falling of shares by 17% in the Egyptian stock market. The effect of the turmoil reverberated as stock markets of Dubai and Oman came tumbling down 4.3% and 3%, respectively. The Saudi Arabian stock market also ended up the same, falling down 2.5% after its 6% slide over the weekend.

As expected, oil prices also surged, with benchmark figures rising by $3.70 or 4.3 percent, at $89.34 on the New York Mercantile Exchange. At one point during the Egyptian uprising, it went up as high as $89.73 per barrel. In Asia, U.S. oil futures are traded up 1% or 87 cents, at $90.21 per barrel.

Economists speculate that should civil unrests spread to Middle Eastern and North African oil producers, the subsequent 10% increase in oil prices would slow down global GDP growth. America and several European economies could also suffer contraction, coupled by the continuing effects of the financial crisis.

Egypt's political unrest started after thousands of protesters gathered and took to the streets the call for the resignation of Egyptian President Hosni Mubarak, alongside demands for economic and political reforms. The widespread demonstrations have resulted in the breakdown of peace, order and state authority.

The situation worsened as reports of deaths, theft and looting climbed following the weakened hold of the Egyptian police and military on crucial cities Cairo and Alexandria. To protect their families, houses and businesses, neighborhoods have organized their own local militia and defense squads.

Demonstrations are expected to continue, as protesters defied curfew and deplored President Hosni Mubarak's firing of his whole Cabinet and the appointment of a prime minister and a vice president.