Oil rises on Syria strike

LONDON, April 7, 2017 – Brent crude futures briefly hit a one-month intraday record of USD 56.08 per barrel on Friday, propelled by geopolitical instability in the wake of an early-morning US missile strike against Syrian government forces.

By contrast, the attack triggered a wider stock market sell-off that saw S&P 500 futures decline 0.1%.

“Oil markets are back in bullish mode after the setback of the previous weeks,” Frank Klumpp, an energy analyst at the German Landesbank Baden-Wuerttemberg, told Reuters. “This news flow seems to bring geopolitical risks back on the radar.”

Following a chemical weapons attack on the town of Khan Sheikhun on Tuesday, US President Donald Trump on Thursday night ordered the launch of Tomahawk missiles from navy ships in the Mediterranean Sea against the Syrian airbase it said the chemical weapons attack had originated from.

Several Syrian soldiers were killed and aircraft destroyed, according to the Syrian government, prompting Russia, a close ally of the Syrian regime, to pull out of an air safety agreement with the US and to call an emergency meeting of the UN Security Council.

“Such a thoughtless step […] threatens global security,” the Russian foreign ministry said in a statement.

Nevertheless, tensions gradually started to ease toward midday on Friday, with US officials seeking to calm markets by asserting that the strike had been a “one-off.” By 12:46 pm London time, Brent futures had eased back to USD 55.10 per barrel, up only USD 0.21 since Thursday’s close.

“The U.S. missile strike on a Syrian air base overnight caused a knee-jerk shift into safe havens, although the impact was moderate as it is being interpreted as a one-off proportionate response,” Peel Hunt analyst Ian Williams told Reuters.

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