Situation in Syria makes oil prices soar
Oil prices have risen significantly due to concerns that Syria is on the brink of a widespread military conflict.
Brent crude oil prices surpassed $113 per barrel during London trading hours and stock markets across the globe have dropped too:
- the FTSE 100 index fell by over 0.6%
- Germany’s Dax and French Cac 40 went down by 2%
- The Dow Jones Industrial Average declined by more than 0.6%
Nearly a third of the world’s oil is produced in the Middle East, the area has some of the world’s major shipping routes. There is worry that a military strike against Syria could trigger further instability in the Middle East.
Soozhana Choi, Deutsche Bank AG’s head of energy research in Washington, said:
“Syria itself is not important for oil. Prices are up because of the broader ramifications of an attack. There are concerns about what Syria’s allies do in response to an attack on the Assad regime. There is a worry that Iran may shelve negotiations over its nuclear program in response.”
In addition, the investment bank Goldman Sachs had previously increased its forecast for oil up to $115 per barrel because of supply disruptions. Libya – one of the biggest oil producers in the world – had a 60 percent production drop because of strikes.
UK Prime Minister David Cameron, said:
“What we have seen in Syria are appalling scenes of death and suffering because of the use of chemical weapons by the Assad regime. I don’t believe we can let that stand.”
Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York, told Bloomberg Businesweek:
“Traders are concerned that what looks like imminent military action in Syria could further destabilize the region. It’s a region that’s been on tenterhooks for weeks now with concern there could be potential for some dislocation of supply.”