Oil Above $102 on Political Volatility In Egypt, Oil Futures Curve In Backwardation

After protesters and the Egyptian military ousted President Mohamed Morsi from power a few days ago (who was elected in a democratic election in 2012), now RT is reporting that there have been deadly clashes between Egyptian troops and pro-Mohamed Morsi protesters. Watch RTs news report below and a raw video via AP. With political volatility erupting again in North Africa, the price of oil (the August future) is now above $102 and the oil futures curve is in backwardation, which isn't a normal condition. So even with economic growth slowing worldwide, political volatility in this oil rich region and declining U.S. oil inventories have increased the price oil. I'm wondering if oil will breakout here and repeat what happened in early-mid 2008, when oil made a new high during a recession and crashed the markets and financial system.

RT's reporter in Cairo said,

at the same time, there is a tense situation along the borders of Egypt. The north and the south of Sinai as well as the Suez is in a state of high alert. There the police are receiving reinforcements earlier in the day Islamists there attacked a local airport. We're also hearing reports that Egypt has closed its border with Gaza. Now there has been a number of instances recently in that vicinity. So what we're witnessing is not only an internal division; what we're witnessing is not only internal threats, but we're also witnessing threats coming from the borders.

August Oil Future via CMEGroup.com

Light Sweet Crude Oil Futures Curve via CMEGroup.com

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