by Patrick Appel
Frank Verrastro and Guy Caruso try to answer:
Egypt produces roughly 700 thousand barrels per day (mb/d) of oil, substantial volumes (2 tcf) of natural gas, and also is home to the largest refining sector in Africa and consequently exports refined product. Perhaps more significantly, however, is that its location and infrastructure facilities make it a key transit area for oil and gas movements both north and south. The fact that there is currently ample spare crude oil capacity in the world to offset any loss of Egyptian output is of little comfort due to the transit requirements of moving additional Middle East oil to European marketshence the designation of the Suez Canal as a significant oil transit “choke point.” However, the presence of (global) spare production and refining capacity would, in time, allow for markets to adjust by altering supply routes and destinations to offset in-country supply losses.