Oil jumps over $108 on Syria conflict
Aug 27, 2013 / 8:00 am
The price of oil jumped more than US$2 on Tuesday, to above $108 a barrel, after the U.S. defence secretary said American forces were ready to act on any order by President Barack Obama to strike Syria.
By early afternoon in Europe, U.S. benchmark crude for October delivery was up $2.12 to $108.04 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 50 cents, or 0.5 per cent, to close at $105.92 on Monday.
Defence Secretary Chuck Hagel also predicted on BBC television Tuesday that U.S. intelligence agencies would soon conclude that last week's deadly attack on civilians in a Damascus suburb was a chemical attack by the government.
The U.S. Navy has four destroyers in the eastern Mediterranean Sea within range of targets inside Syria. The U.S. also has warplanes in the region.
The price of oil has risen about 15 per cent in the past three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially from Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes.
"The political uncertainty across Middle East has dominated the oil market in the last few months, providing upside momentum as the political and economic conditions remain very tentative," said a report from Sucden Financial Research in London.
On Monday, U.S. Secretary of State John Kerry appeared to be making a case for an aggressive response to the Syrian conflict when he said there "undeniable" evidence of the Damascus gas attack which killed hundreds of people.
Analysts at Commerzbank in Frankfurt said oil prices were "in a kind of 'comfort zone' at between $100 and $120 per barrel."
"In the event of a military strike, the risk of the situation escalating in the Middle East would increase, however, which should see oil prices climb to the top of this trading corridor," Commerzbank said in a note to clients.
Brent crude, which sets prices for imported oil used by many U.S. refineries, was up $1.91 to $112.64 a barrel on the ICE Futures exchange in London.
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