Traders fears on US intervention in Syria lead oil prices on a 9-month high on Friday. ICE August Brent rose as much as 74 cents to $106.67 a barrel, while the US oil benchmark also rallied, Nymex July West Texas Intermediate rising 89 cents to reach a new nine-month high of $98.74 a barrel.
The market fears were triggered when U.S officials said on Thursday that President Barack Obama has authorized sending weapons to Syrian rebels for the first time, after the White House disclosed that the United States has conclusive evidence President Bashar Assad’s government used chemical weapons against opposition forces trying to overthrow him.
President Obama has repeatedly said the use of chemical weapons would cross a “red line,” suggesting it would trigger greater American intervention in the two-year crisis and thus increasing the potential of a spillover of the Syrian crisis into the Middle East. A potential US intervention in the Syrian crisis could lead to the civil conflict becoming a struggle by proxy between the US and Russia as well as Iran, which both support the Syrian government.
Key Factor To Decide Oil Price
Another key factor on oil prices is the possibility of further production disruptions in the Middle East due to potential strikes on Iran’s nuclear facilities, even though according to analysts, the victory of diplomat and cleric Hassan Rowhani, in the recent Iran elections could defuse such worries.
Key factor that will decide future oil prices is the upcoming Federal Reserve monetary policy meeting later this week. A potential decision from the Federal Reserve to scale back on its monetary stimulus program – known as quantitative easing (QE) could lead to stronger dollar rates which would have adverse effect on oil prices. The US central bank’s Federal Open Market Committee signaled last month that it could taper its $85 billion-a-month bond buying program if economic conditions improved.