Deepening Syrian crisis may have caused crude oil prices to jump nearly 3 percent to an 18-month high. Market analysts observe that there have been a lot of supply disruptions thanks to the civil strife in Syria that is impacting the entire Middle East. Situation may worsen if the U.S.-led military responds to the Syrian government’s violation of human rights in the ongoing civil war.
The price of the U.S. benchmark crude was $95 in late June; however, now West Texas Intermediate, on the New York Mercantile Exchange hit a record high at $109.01 a barrel for October delivery. Energy experts believe that the rise in the prices of West Texas Intermediate crude is on the speculation that tension in Syria may disrupt Middle East supplies.
Dried up Oil Production in Syria
Syria which once exported about 150,000 barrels a day has gone through a slide and now produces no more than 50,000 barrels a day. Though a lot of reduction in the production has to do with the sanctions it invited from the international community that barred it from selling oil internationally in 2011, it produced 350,000 in March.
Though Syrian oil production may not have a grave impact on the global oil production, the expansion of the conflict zone when the U.S.-led military intervenes will definitely have some repercussions. Other major oil producer Iraq has also seen unrest where violence has reached the highest level in five years.
Reportedly, Sunni insurgents in Iraq have been disrupting the supply chain of oil by bombing the export pipelines from Kirkuk to the Turkish port of Ceyhan. Increasing crude oil prices are however better for the oil producing OPEC (the Organization of the Petroleum Exporting Countries) as it is helping them to full their coffers.
OPEC countries like Saudi Arabia have been receiving a lot of sovereign wealth funds. In fact, the United Arab Emirates, Saudi Arabia, Qatar and Kuwait have recorded an increase in their sovereign wealth funds which have reached to more than $2 trillion, up $420 billion over the past two years. However, the increased oil prices are denting the economies of EU, India, and China which depend a lot on the crude oil from the Middle East.
Light at the End of the Tunnel
Despite all pessimistic views from the energy experts, some skeptics expect that the run-up in oil prices may be temporary as according to them a limited attack on Syria may not have a grave impact on the long term oil production and the consequent prices.
To contact the reporter this story: Jonathan Millet at firstname.lastname@example.org