Brent crude surged to a six-month high on Wednesday as western countries prepared to attack Syria, raising concerns over the security of oil supplies across the Middle East, which pumps a third of the world’s oil, www.upstreamonline.com reported on Wednesday.
The United States and its allies are readying for air strikes against the forces of President Bashar al-Assad, blamed for poison gas attacks last week. But the timing of any action was unclear.
A prolonged outage at several Libyan oil fields also under pinned prices, with Brent gaining four per cent and the US benchmark three per cent so far this week.
“Though it may have taken some time for the oil market to respond to the threat of a military strike against Syria, it has now done so with a vengeance,” Commerzbank said in a research note.
Brent was at $115.80, up 1.44 at 1240 GMT after earlier reaching a six-month high of $117.34 a barrel. US crude rose $1.11 to$110.12, after hitting an intra-day peak of $112.24 – its highest since May 2011.
“The latest price rise raises the question of just how much the price can continue to climb. This will doubtless depend on how events play out in the region,” said Commerzbank.
CMC Markets chief market analyst Ric Spooner commented to Reuters: “Assuming they take action, it’s likely for the risk premium to be built in (to oil prices) for quite a while.”
The risk premium could vary from $10-$25, Spooner said, adding that if the situation worsens Brent could rise to $119-$126 and US crude could move toward $114-$115.
Oil supply from OPEC producer Libya has already been reduced to a trickle after an armed group shut down a pipeline linking its largest western oilfields to the ports.