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Oil prices jump 2 percent after US launches missile strike in Syria

Traders priced in what has in the past been called a Middle East risk premium.

Published: 07th April 2017 08:36 AM  |   Last Updated: 07th April 2017 08:55 AM   |  A+A-

An oil field in Russia. (File photo for representation | Reuters)

By Reuters

SINGAPORE: Oil prices surged more than 2 percent on Friday after the United States launched dozens of cruise missiles at an airbase in Syria.

U.S President Donald Trump said he had ordered missile strikes against a Syrian airfield from which a deadly chemical weapons attack was launched earlier this week, declaring he acted in America's "national security interest" against Syrian President Bashar al-Assad.

After tepid trading before the news, Brent crude futures, the international benchmark for oil, jumped to $56.08 per barrel before easing to be up 1.6 percent at $55.75 per barrel at 0310 GMT.

U.S. West Texas Intermediate (WTI) crude futures also climbed by over 2 percent, to a high of $52.94 a barrel before receding to be up 1.8 percent at $52.61.

Both benchmarks hit their highest levels since early March.

The strikes rattled global markets. While oil prices surged as traders priced in what has in the past been called a Middle East risk premium, and safe-haven products like gold jumped, stock markets and the U.S. dollar slumped.

"The U.S cruise missile strikes have seen crude oil jump over two percent in a straight line," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Halley said the strikes had potentially big implications for oil markets.

"What will be the response of Iran and Russia, two of the world's largest oil producers and staunch allies of the Assad regime?... We will have to wait for these answers as the day moves on," he said.

U.S. officials said the military had fired 59 cruise missiles against a Syrian airbase controlled by Assad's forces, in response to a poison gas attack on Tuesday in a rebel-held area.

Officials said the United States had informed Russia ahead of the strikesn. The strikes did not target sections of the Syrian base where Russian forces were believed to be present.



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