Oil Hits One-Month High After US Airstrikes in Syria

Cornelia Mascio
Aprile 8, 2017

Both main contracts jumped more than two percent to their highest levels in a month after US President Donald Trump ordered an assault in retaliation for a chemical attack in Syria that Washington blamed on Damascus.

Shakil Begg, head of oil research at Thomson Reuters, said it was clear that military tensions in the Middle East had ratcheted up prices but warned that the market may be turning a blind eye to factors that could drive them lower.

"We maintain our $60 and $70 Brent oil price targets for 2017 and 2018 respectively based on fundamentals instead of geopolitical speculations", added Kwan.

Although Syria is not a major oil producer, any escalation of the conflict feeds fears about oil supplies due to the country's location and alliances with big oil producers in the region.

Earlier in the session, a USA missile strike on Syria hit risky assets though prices recovered after a US defence official told Reuters the missile strike was a "one-off", helping to calm market nerves.

On Friday morning, gas prices rose slightly across the nation and were about 35 cents higher than at this time a year ago. But "the geopolitical calculus is increasingly complicated" - a risk that hasn't been reflected in oil prices recently. Minnesota was slightly lower than North Dakota.

"We saw gold ease back from its highs and oil easing back a little bit, and we're seeing the United States futures rally also", he said.

Lynn Helms, director of North Dakota's Department of Mineral Resources, called the uptick in oil prices a "common reaction to turmoil in the Middle East".

"That would imply the market's not that anxious about what's going on in Syria at this point, otherwise our market would be down a lot more", he said.

Analysts at Tudor Pickering Holt & Co. said Syrian oil production amounts to "less than a thimbleful" of global capacity.

But OPEC companies began to cut production in recent months, pushing oil prices to 18-month highs.

Russia, which is part of a deal between OPEC and non-OPEC oil producers struck late last year to rein in supplies, said April 7 it was too early to say whether a deal could be extended into the second half of the year. He also said technology has improved during the downturn so oil companies can drill oil for a larger profit margin.

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