Oil prices rise in the wake of Syrian missile strike

Bloomberg/Fuel Fix:
Oil jumped as the U.S. cruise-missile attack against Syria roiled global financial markets.

Futures in New York and London surged more than 2 percent to the highest in a month. The strike early Friday morning targeted hangars, planes and fuel tanks at one Syrian military airfield, according to a U.S. official. Syria borders Iraq, OPEC’s second-biggest crude producer. The news rippled across financial markets, with the yen and gold advancing as stocks declined.

“It seems today’s spike is just a knee-jerk reaction to the missile strike,” said Thomas Pugh, a commodities economist at Capital Economics. “Syria produces little oil itself so the spike probably reflects the risk of increased tensions between the U.S. and Russia or Iran.”

Oil had struggled to extend a rally beyond $51 a barrel as concern over surging U.S. supplies countered optimism around a possible extension to production cuts led by the Organization of Petroleum Exporting Countries. The strike against Syria comes two days after Bashar al-Assad’s regime used poison gas to kill scores of civilians, drawing international condemnation while President Donald Trump called it “an affront to humanity.”
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Most of Syria's oil is from areas under the control of ISIS and those facilities have been stymied by previous US attacks on ISIS's main cash crop.   Iran has been selling mostly oil it put in storage during the time it was under sanctions and its fields need to be upgraded to increase production, but banks and western companies are reluctant to deal with the Islamic religious bigot in charge of the country.  Russia is also burning through its reserves because of the lower price of oil.

Russia's reaction to the strike is one that seems to be based more on emotion than logic.  Some Russians have actually said that the strikes would produce more WMD attacks which is inconsistent with their previous argument that they had gotten rid of Syria's WMD.  Ambassador Haley has questioned whether the Russians lied about removing the WMD or whether they are just incompetent.  I suspect, based on their reaction, that they have not been telling the truth.

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