Brent crude oil price flies past $72 a barrel on threat of missile attack on Syria
Oil prices jumped higher again this morning after Donald Trump’s threats to fire missiles at Syria sparked fears of supply disruptions in the Middle East.
At the time of writing, Brent crude oil futures were up 0.17 per cent at $72.18 per barrel, having hit $72.49 earlier in the day.
West Texas Intermediate, the US benchmark, rose 0.34 per cent to $67.05 a barrel.
Recent geopolitical threats have lifted oil prices out of the doldrums of the past few months, rocketing them up to highs not seen since late 2014.
Read more: Oil hits $70 as trade war threat eases and US decision on Syria imminent
“The world is now on notice for US, and potentially allied, military strikes in Syria, as the US attempts to take action for chemical warfare attacks. With Russia having pledged itself to the defence of Syrian bases, it looks like we have the makings of a confrontation,” said Chris Beauchamp, chief market analyst at IG.
“Trade wars now seem quite petty compared to the prospect of conflict, but the limited reaction in equities might suggest the market is not prepared to ‘sell the rumour and buy the fact’ just yet,” Beauchamp said.
Lukman Otunuga, research analyst at FXTM, added that soaring shale production in the US is going to limit oil’s gains.
While oil is likely to remain supported by geopolitical risk and a vulnerable US dollar for the moment, soaring US shale production has the ability to cap upside gains.
The fundamentals behind oil are likely to remain shaky in the longer-term as increasing US output complicates Opec’s [the Organisation of the Petroleum Exporting Countries] efforts to prop prices higher and rebalance markets.
Last night, US stockpile data from the Energy Information Administration (EIA) sent oil markets into increased volatility. The EIA showed stocks had grown by 3.3m barrels while analysts had expected a 207,000 barrel draw.
Read more: Donald Trump’s tweets send oil prices to December 2014 high of nearly $72