Oil hovers near $98 a barrel as military issues ultimatum to embattled Egypt leader

BANGKOK – Oil hovered near $98 a barrel Tuesday, underpinned by political unrest in Egypt that raised fears of disruption to global crude supplies.

Benchmark crude for August delivery was down 3 cents to $97.96 a barrel at early afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract jumped $1.43 to close at $97.99 in New York on Monday.

After massive weekend protests in Egypt that continued Monday, the country's military issued an ultimatum to President Mohammed Morsi that gives him 48 hours to meet the demands of the millions who have taken to the streets seeking his ouster.

The ultimatum, rebuffed by Morsi, raised worries on both sides the military could outright take over, as it did after the 2011 ouster of autocrat Hosni Mubarak. It also raised the risk of a backlash from Morsi's Islamist backers, including his powerful Muslim Brotherhood and hard-liners, some of whom once belonged to armed militant groups.

Traders were concerned that the protests in Egypt and the civil war in Syria could affect the production and transport of oil supplies in the Middle East and North Africa.

"Egypt may not be an oil producer, but they are an important passageway for everything from the Middle East to the rest of the world," said Carl Larry of Oil Outlooks in a commentary.

Brent crude was up 12 cents at $103.12 a barrel on the ICE futures exchange in London.

In other energy futures trading on Nymex:

— Natural gas was up 0.2 cent at $3.579 per 1,000 cubic feet.

— Heating oil added 0.3 cent to $2.876 per gallon.

— Wholesale gasoline rose 1.1 cent to $2.745 per gallon.