Energy strategists believe there will be nominal upside momentum to crude oil resulting from the Syria strikes. Instead, Iran and Russia’s reactions to the strikes along with whether or not the White House re-imposes sanctions on Iran will determine oil’s future.
Syria produces negligible volumes of oil, but benchmark oil prices rose to its highest since 2014 in the build-up to military action reflecting fears of broader regional instability. Though it’s unclear if the strategic aim of the airstrikes — to degrade Syria’s chemical weapons stockpiles — has been achieved, the action is perceived as a single strike and unlikely at this stage to provoke an outright confrontation between Assad allies Russia and Iran with the West in Syria.
“I think the market will be quite relaxed about the strikes, which were more limited than they might have been, and have found little response from the Assad regime or Russia,” said Robin Mills, CEO of Qamar Energy, and a former Shell executive. “It’s already been pretty clearly telegraphed that the U.S. will withdraw from the Iran deal, but the big question is what it then tries to do. I do think it’s worth watching further sanctions on Russia. The tighter market now is certainly more vulnerable to geopolitical concerns or real disruptions.”
“I would not be surprised to see the oil price sliding given the fact that it has been priced in already,” said Eugen Weinberg, head of commodity research at Commerzbank, told CNBC on Sunday.
As predicted, Brent crude and U.S. oil futures traded at $72.32 a barrel and $67.17 at around 7.50 a.m. Singapore time, down by 0.36 percent and 0.33 percent.