Oil prices settled above the $109 threshold yesterday, as concerns regarding the possibility of U.S. military intervention in Syria had proved the major variable driving prices of the commodity upward.
Crude oil futures for October delivery improved by 2.9 percent, or $3.09, to $109.01 per barrel on the New York Mercantile Exchange. This followed a 50-cent decrease on Monday, and represented the highest closing price per barrel for a most-active contract since late February 2012. FactSet’s analytics also revealed that Brent crude prices were at their highest in quite some time, closing at 3.3 percent higher, or $3.63, to $114.36 per barrel on ICE Futures. This was the highest closing since late February 2013.
According to International Energy Agency analyst Matthew Parry, worries about Middle East tension are justified as the situation “could completely implode” following remarks from both Iran and Russia. He also postulated quite interestingly that “prices were already carrying a fairly large risk premium, and the latest rise only reflects an increase in concerns, not fresh worries per se”
Separately, U.S. Secretary of State John F. Kerry said on Monday that the U.S. government was sure that, despite their denial, the Syrian government had launched a chemical weapon attack on civilians, and that the government should take responsibility for what it did.
Aside from the U.S., Russia and Iran, China has also warned that it may take military action on Syria, with Russia specifying that this could lead to “catastrophic consequences” in the country. Although, Syria is not a major oil producer, it is possible that further tension could negatively affect supply across the Middle East.