LONDON -- Oil slipped toward $105 a barrel Thursday after Egypt's army ousted President Mohammed Morsi, helping to ease concerns over the threat of supply disruption in the Middle East.
The Suez Canal, a vital waterway for oil shipments, was not affected by the recent unrest, but analysts said real and threatened supply disruptions in regions including the Middle East, which pumps a third of the world's oil, would support prices.
"It is too early to say that the situation has calmed down, but the safe operation of the Suez, which is in the interest of both Persian Gulf countries and oil-consuming nations, seems to be guaranteed," said Tamas Varga, an analyst at oil brokers PVM.
Brent crude fell 29 cents to $105.47 by Thursday afternoon after rising to $106.03 on Wednesday, a two-week high. U.S. crude slipped 12 cents to $101.12.
Besides the perceived risks to Middle East supply due to tension in Egypt, disruption to exports in Libya and Iraq and relatively scarce supply of Russian crude into the Mediterranean have tightened actual oil flows.
"It is still too early to sound the all-clear," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. "Supply risks are likely to lend continued support to oil prices."