Oil prices jumped by close to 2 percent today as the crisis in Syria worsens. The price of a barrel of crude hit around $110 this morning. The crisis in Syria, and the resulting instability—or at least the perception of instability—has resulted in consistent rises in the price of oil in recent days. As President Barack Obama continues to seek Congressional approval for an attack, the market is worried about the possible results.
The biggest news on the Syrian conflict today came from Russia, where the country’s President Vladimir Putin said he would continue to offer help to the Syrian regime, even if the United States and France go through with their attack on the country. Mr. Putin made the comments at the G20 summit where Barack Obama tried to influence international partners to support a U.S. strike on Syria.
Syria tensions flare
If there is an increase in the resources available to each side in the Syrian conflict, the country’s death toll will only worsen, and the resulting conflict could cause widespread instability across the Middle East. At particular risk are Israel, Jordan, Iraq and Lebanon. Lebanon has already seen the war spill across its borders.
Instability in the Middle East could be particularly painful right now as Egypt, the region’s largest country, is dealing with instability of its own. Egypt and Syria were in a political union up until 1961, and there are still many ties between the two countries.
New Cold War
The political line up on either side of the Syria conflict is beginning to resemble conflicts during the Cold War. In that era, conflicts in far-off parts of the world were used to leverage support for one side or the other. In Syria, the involvement of the Russians and Americans is stoking fears that the conflict could grow into something larger.
Russia has offered support to Syria in the conflict, meaning that the political niceties of getting in and out of the conflict will not be easy for the United States. Back in 2011 when the country went to war in Libya, that country had no major allies.
If the conflict in the Middle East does widen from Syria, international oil delivery problems will mount and prices will spike. Today’s rise represents a small increase in the risk of that happening, rather than market belief that such a crisis will erupt.