Andy Sutton's Extemporania

Oil prices broke through the $100 a barrel level for the first time in more than two years, amid market fears that Egypt’s turmoil will hit oil flows.

Although both the Suez Canal and a pipeline linking the Red Sea with the Mediterranean continue to operate, the popular uprising to unseat Hosni Mubarak, Egypt’s president, has brought much of the rest of the economy to a halt.

The army said on Monday it would not use force against Egyptians staging protests demanding President Mubarak step down, a statement said. It said “freedom of expression” was guaranteed to all citizens using peaceful means.

This is the first such explicit confirmation by the army that it would not fire at demonstrators who have taken to the streets of Egypt since last week to try to force Mr Mubarak to quit.

Egypt’s new vice-president Omar Suleiman said on Monday he had been asked to start dialogue with “all political forces” – including on constitutional and legislative reform, a key demand voiced by anti-Mubarak protesters.

The constitutional amendments include easing restrictions on those who eligible to run in presidential election. “The president has asked me today to immediately hold contacts with the political forces to start a dialogue about all raised issues that also involve constitutional and legislative reforms in a form that will result in clear proposed amendments and a specific timetable for its implementation,” Mr Suleiman said in a televised address.

Local and foreign companies have suspended operations, while holidaymakers are rushing to airports in an effort to evacuate the country.

As the stand-off between protesters and Mr Mubarak escalates, activists are preparing for what some have dubbed a million-strong march today.

At entrances to Tahrir square in Cairo, young men held up signs saying “One million march. 10am. Down with Mubarak.”

Mr Mubarak, who is facing the gravest threat to his 30-year rule over the Arab world’s most populous country, named a new cabinet to replace ministers close to his son, and presumed heir, Gamal.
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“The people are calling for regime change, not for a change of government,” said Osama el-Ghazali Harb, leader of the opposition Democratic Front party. “These are all moves to buy time.” Although Egypt is itself a small oil producer, the Suez Canal is an important waterway for shipments of Middle Eastern oil. A detour around the southern tip of Africa would add about 6,000 miles to transit routes from the Middle East to Europe and the US.

Brent crude, the global benchmark, surged to an intraday high of $101.19 per barrel, the highest since September 2008.

“It is something that we are, as you can imagine for our economy and for the recovery of the global economy, watching quite closely,” said Robert Gibbs, White House press secretary.

“We are extremely concerned about the Middle East situation,” said Marco Dunand, chief executive of Geneva-based Mercuria, one of the world’s biggest oil traders. “This is going to increase volatility substantially.”

Lawrence Eagles, head of oil research at JPMorgan, said that the primary risk from the turmoil was its “potential to act as a catalyst [for] unrest in countries that are otherwise seen as stable”, including Saudi Arabia, the world’s largest oil exporter, Kuwait and the United Arab Emirates.

Fearing a contagion effect, Arab leaders have shown support for Mr Mubarak, hoping that he can quell the fury on the streets. On Monday the embattled president named a retired police investigator to take over the interior ministry.

Police have been blamed for more than 100 deaths since Egypt’s uprising erupted a week ago and forces melted away on the weekend, leaving residents in major cities to face looters and criminals released from prisons.

Samir Radwan, a respected development economist, was appointed the new finance minister. Acknowledging that his tenure might be short-lived, he told the Financial Times: “Let us hope we can save the situation and bring stability to our country. We owe a lot to the people on the street, and will respond to their calls. That’s the only reason I accepted the job.”

But analysts said the government has in mind the small legal parties, rather than the group of young activists, intellectuals and parties, including the Muslim Brotherhood, which have been co-operating with Mohamed ElBaradei, the reform advocate and Nobel laureate who has taken on a leading role in the protests.

Politicians working with Mr ElBaradei said that, in any case, they were not interested in talks with the prime minister in any case. “Of course we would not go to talks,” said Mr el-Ghazali Harb.

Additional reporting by Daniel Dombey in Washington