Oil prices hit a one-month high on Friday after the US attacked a Syrian government airbase, sending shockwaves through global markets and raising concerns of the conflict spreading in the oil-rich region.
The toughest US action yet in Syria’s six-year-old civil ramped up geopolitical uncertainty in the Middle East. Oil, gold, foreign exchange, German and US 10year bonds, all reacted strongly to the air strikes.
Brent crude futures were up 88 cents at $55.77 a barrel, the highest since March 8, after reaching an intra-day high of $56.08 a barrel shortly after the overnight air strikes were announced.
US West Texas Intermediate (WTI) crude futures were up 85 cents at $52.55 a barrel, having reached a intra-day high of $52.94 a barrel.
“Oil markets are back in a bullish mode after the setback of the previous weeks. This news flow seems to bring geopolitical risks back on the radar,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
Although Syria has limited oil production, its location and alliances with big oil producers in the region mean any escalation of the conflict has the potential to increase supply-side fears.
Other analysts were more cautious, saying the conflict in Syria had no bearing on oil fundamentals.
Oil markets remain oversupplied, even with efforts led by the Organization of the Petroleum Exporting Countries to cut supplies to prop up prices.