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Why oil prices are at their highest level in 14 months

The price of oil neared $102 a barrel for the first time since May last year, as Egypt's political crisis intensified, raising the risk of disruptions to Mideast supplies.

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Rick Bowmer/AP/File
Gasoline drips from a nozzle at gas station in Lake Oswego, Ore. The price of oil is soaring: benchmark crude for August delivery was up $2.20 to $101.80 a barrel early Wednesday morning, Bangkok time, in electronic trading on the New York Mercantile Exchange.
  • By Associated Press

| BANGKOK

The price of oil neared $102 a barrel for the first time since May last year as Egypt's political crisis intensified, raising the risk of disruptions to Mideast supplies.

Benchmark crude for August delivery was up $2.20 to $101.80 a barrel early Wednesday morning, Bangkok time, in electronic trading on the New York Mercantile Exchange. The contract gained $1.61, or 1.6 percent, to close at $99.60 on Tuesday in New York.

Embattled Egyptian President Mohammed Morsi vowed not to resign hours before a deadline to yield to the demands of millions of protesters or see the military suspend the constitution, disband parliament and install a new leadership.

The Islamist leader demanded that the powerful armed forces withdraw their ultimatum, saying he rejected all "dictates" — from home or abroad. Outside on the streets, the sense that both sides are ready to fight to the end sharpened, with clashes between Morsi's supporters and opponents killing at least 23 people, most of them in a single incident of fighting outside Cairo University.

Egypt is not an oil producer but its control of the Suez canal, one of the world's busiest shipping lanes which links the Mediterranean with the Red Sea, gives it a crucial role in maintaining global energy supplies.

Traders are also awaiting the Energy Department's weekly report on U.S. stockpiles of crude oil on Wednesday and expect the figures to show an increase in demand. Data for the week ending June 28 is expected to show a drawdown of 3 million barrels in crude oil stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

Brent crude was up $1.45 to $105.45 a barrel on the ICE futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline was up 3.4 cents to $2.817 a gallon.

— Heating oil added 4.5 cents to $2.947 a gallon.

— Natural gas was down 0.5 cent at $3.649 per 1,000 cubic feet.

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