NEW YORK — The price of oil climbed higher above $107 a barrel on Friday amid fears of potential supply disruptions as violence in Egypt continued to spiral. By early afternoon in Europe, benchmark crude for September delivery was up 23 cents to $107.56 in electronic trading on the New York Mercantile Exchange. The contract rose 48 cents to close at $107.33 per barrel on Thursday. The ouster in early July of Egypt's president, Mohamed Morsi, has helped lift crude prices, reflecting the risk of a supply disruption from the country that controls the Suez Canal. Egypt is not a major oil exporter, but traders worry that the violence could spill over to more important oil-exporting countries in the Middle East or disrupt the Suez Canal, a major trade route. “Alarmingly, the underlying causes for the instability in the region seem to be taking a systematic character, making it less likely that the region will return to stability in the near future and increasing the chances for continued supply outages,” said a report from analysts at JBC Energy in Vienna. Libya's oil output has fallen sharply over the past months, while conflicts in Tunisia, Syria, Yemen and Sudan, as well as rising sectarian violence in Iraq are all clouding the region's future, the JBC Energy report said. Oil passed $100 per barrel in early July for the first time since September as Morsi was being ousted. It reached a high for the year of $108.15 on July 19 as Libyan output fell due to strikes at oil facilities. October Brent crude, a benchmark used to set prices of imported crude purchased by many US refineries, was up 35 cents to $109.95 a barrel on the ICE futures exchange in London. British shale driller suspends work An oil explorer has suspended drilling in southern England in response to the threat of an escalating protest against fracking, the controversial process used to extract gas and oil from shale deposits that has transformed the US energy market. Caudrilla Resources's site in the village of Balcombe in rural West Sussex has become a focal point for protesters who oppose fracking, a technique the company has pioneered in the search for shale gas in Britain. Public debate on shale gas and fracking has intensified in recent months. The government in July proposed tax breaks for shale gas investment as part of its efforts to follow the United States, where surging production has lowered energy prices and cut imports. Prime Minister David Cameron on Monday gave his unequivocal support to fracking, risking angering his party's supporters from more rural areas where any exploration is likely to take place. Hydraulic fracturing, or fracking, retrieves gas and oil trapped in tight-layered rock formations by injecting high-pressure water, sand and chemicals. Critics say it can trigger small earthquakes and pollute the water supply, while others oppose any oil and gas exploration in picturesque parts of the countryside. UK-based Cuadrilla said on Friday it would scale back its operations in West Sussex after taking advice from police who are concerned about an influx of up to 1,000 extra protesters this weekend. “We plan to resume full operations as soon as it is safe to do so,” the privately owned company said. Cuadrilla is drilling a conventional test well to look for oil in Balcombe, but has not ruled out seeking permission for fracking at a later date depending on the results of its initial exploration. Conoco Philips drilled a well on the same site in 1986 which found evidence of oil, but not in commercial quantities. Acquiring fracking permits in the UK is a lengthy process which often takes months. — Agencies
