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Page added on April 7, 2017

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Why Oil Could Be At Risk From U.S. Airstrikes in Syria

Public Policy

At around 8:40 PM ET, U.S. warships launched 59 Tomahawk cruise missiles at a Shayrat airbase in Syria. This was the first U.S. military action against Bashar al-Assad‘s regime during a six-year civil war. This was in reaction to chemical attack on a rebel-held town in northwestern Syria on Tuesday that killed dozens.

Photo by Joe Raedle/Getty Images

“Geopolitics is once again taking a central role in commodity markets in the wake of surprise U.S. airstrikes in Syria,” writes RBC Capital Markets’ Helima Croft. “While there is no real immediate supply disruption threat given that the majority of local production has long been offline due to the civil war, there remains a number of risks.”

Crude oil prices aren’t showing any signs of weakness so far. West Texas spot futures have gained 0.80% so far on Friday to around $52.12/bbl. The iPath S&P GSCI Crude Oil ETN (OIL) has gained 0.88%. United States Oil (USO) has gained 0.74%. Meanwhile energy stocks are getting dinged. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) — yesterday’s ETF flopper — has fallen 0.32% and the Energy Select Sector SPDR ETF (XLE) has declined 0.14%.

If these U.S. airstrikes are a one-time event, oil implications will be “negligible.” If not, previous oil assumptions “may be upended” says Croft. The two big questions will be whether tensions will emerge between Russia and the Sunni Gulf States and whether U.S. airstrikes will change the dynamics of presidential elections in Iran.  She explains:

Certainly, if the fighting were to intensify and spill over the borders into the neighboring producer states, regional supplies would be at risk. This scenario likely remains a low likelihood one for now, in our view. In the immediate aftermath of the strike both oil and gold prices rallied with geopolitical risk premiums returning to the market – at least for a period; in fact, this is a prime example of the “Trumped Up” portion of our gold trading thesis this year.

Second, we believe that the US strikes could upend the dynamics of the May presidential elections in Iran. The conventional wisdom to date was that President Rouhani would be able to secure a second term with the implicit support of the Supreme Leader despite the rising criticism of the nuclear deal from the conservative quarters and growing public disenchantment with the more modest economic dividend from the deal due to residual sanctions.

barrons



26 Comments on "Why Oil Could Be At Risk From U.S. Airstrikes in Syria"

  1. Plantagenet on Fri, 7th Apr 2017 2:26 pm 

    When it comes to oil in the ME, Trump is just like Obama who is just like Bush.

    US policy is now Bomb first—-ask questions later.

    Cheers!

  2. Boat on Fri, 7th Apr 2017 3:28 pm 

    The US hawks are hitting the air waves. Putin is to blame for not keeping Assad reeled in. If Hillary had been elected Assad wouldn’t have had the guts to gases his own citizens. What’s next? Ukraine? N Korea? Time to draw some red lines. Maybe it’s time to free the Kurds. 60 missiles on a couple South Sea islands? If the US leads the world will follow. Let’s see if Trump becomes king gps.

  3. rockman on Fri, 7th Apr 2017 3:28 pm 

    “…oil prices aren’t showing any signs of weakness so far. West Texas spot futures have gained 0.80%”. Maybe it’s just me but it’s so funny to see these jokers use the second decimal place as if it’s meaningful. Especially since those changes in future bids will have no bearing on how much is paid for physical oil sold in April under long term sales contracts. Contracts under which the great majority of physical oil is sold.

  4. eugene on Fri, 7th Apr 2017 5:29 pm 

    The issue I like is there’s no “proof” Assad did anything. Everything I’m hearing is “believe”, assume and similar terms indicating we simply aren’t sure. However for those devout Trump followers we “know”.

  5. makati1 on Fri, 7th Apr 2017 5:30 pm 

    When your empire is failing what do you do? Why, you go to war to distract the peasants and justify a police state lock-down. If the sources are correct. lees than half of the missiles reached their target. Not a good indication of America capability. Russia has the best. The U$ has the also rans.

    I now upgrade my WW3 probability to 30:1. I hope you all are preparing for war and not just climate change chaos. This is one the U$ cannot win or even come close. There will be no winners.

    I bet Moscow is running air raid drills and airing out their shelters as we type. I would be if I were Putin. We shall see.

  6. Davy on Fri, 7th Apr 2017 5:40 pm 

    The issue I like is there’s no “proof” Assad did anything. Everything I’m hearing is “believe”, assume and similar terms indicating we simply aren’t sure. However for those devout Trump followers we “know”.

  7. onlooker on Fri, 7th Apr 2017 5:43 pm 

    This purported gas attack by Assad is fake Western news to rally world opinion on the side of toppling Assad which remains the goal of US

  8. Davy on Fri, 7th Apr 2017 5:46 pm 

    Eugene, your lying liberal left is the ones sporting the fake Russian news. This should be great news for
    you. You guys hate Putin and blame him for your miserable failure. Now that Trump thumped Putin a
    little you dumbasses are whining how bad Trump is from attacking Syria. WTF is it? You can’t make
    your mind up can you. It is all about spin isn’t it. You guys make me sick.

  9. Davy on Fri, 7th Apr 2017 5:46 pm 

    Calm down makati, you’re going to have an aneurysm over all this. You are so friggen into WWIII we should nickname you “warpiggly”. Have you ever reflected on your mental health and asked yourself if you have an obsession with war and hate?

  10. Cloggie on Fri, 7th Apr 2017 5:59 pm 

    I bet Moscow is running air raid drills and airing out their shelters as we type. I would be if I were Putin. We shall see.

    Russia is strengthening Syria’s air defense. One wonders against who.

    http://www.newsweek.com/russia-pledges-increase-effectiveness-syrian-air-defenses-580506

  11. Boat on Fri, 7th Apr 2017 6:19 pm 

    Onlooker,

    Other than the whitehouse described the attack as a one off, who knows. Every new prez wants to shows military strength, remember bush? Obama despite complaints was described as weak because he let China, Russia, Iran, N Korea etc. control world events that were beyond international norm. Trump will want to be known as a strong prez. His ego is large. Now little rag head wannabes like you will have much more to complain about.

  12. makati1 on Fri, 7th Apr 2017 6:23 pm 

    Davy, I’m fine. You are the one in denial. I bet you are popping pills like crazy theses days, or using some other drug of choice to keep calm. lol

    I have no ‘obsessions’. I only know what I see and read from hundreds of sources. I have a more accurate picture than you could ever have there behind the USMSM Iron Curtain.

    History is a good source of what happens when an empire is in trouble, and the U$ empire is in deep, deep trouble. War. This time is no different, except that it will come home to the U$ and not be fought in some other country. It is either war or capitulation. I do not see the U$ capitulating. To arrogant. There are more military stars in Trump’s gang than there are stars in the night sky.

    Denying what is obvious is just stupid and a variation on suicide. I didn’t vote for either war monger. There was no chance for peace with the military/security industrial complex running America. The fools who believe they can win a nuclear war are now in charge. If the U$ continues, it will be war and Putin might just decide to fire the nukes to cripple the U$ before it can strike. I would.

    When will your kids sign up for the slaughter? If you have kids, that is. Mine are too old and my grand kids are too smart. No draft. lol

  13. Boat on Fri, 7th Apr 2017 6:24 pm 

    I do feel a little guilty bashing ragheads when there are millions loving the west support to free their countries from religious idiots. If Syria wants to lose the rest of their Air Force, keep gassing. 5-6 trips of stealth bombers ought to do it.

  14. Davy on Fri, 7th Apr 2017 7:06 pm 

    makati, being on the 27th floor of an apartment with 20MIL people below me is a horrible thought. You have a dreadful life ahead if things get bad. No family to come to your aid and closing in on 80 years. Sounds lonely to me.

  15. makati1 on Fri, 7th Apr 2017 7:57 pm 

    Davy, you want to believe that I am in a worse place than you, but that simply isn’t true. Not that you will ever admit it. Nine years here has not proved me wrong in my choice. The U$ ‘news’ only proves I was right.

    I do not need family support. I have many Pinoy friends who help if needed. Maybe you don’t? My family will be busy trying to survive where they live, not where I would have lived had I stayed in the U$. They would not be around to ‘help’ me if I needed any. I do not.

    I made my peace with death long ago. No ‘heroic’ expensive, last gasp, operations or procedures wanted, just ‘lights out!’. I have lived my three score and ten. Every day now is a bonus. I want to live only as long as I can take care of myself and my personal needs. Not a second longer. I am not afraid of dying. You must be.

  16. onlooker on Fri, 7th Apr 2017 8:15 pm 

    I think one good thing about this world wide doom scenarios is it has forced us all to contemplate our own mortality and thus confront the associated fear. And in turn vanquish said fear

  17. Davy on Fri, 7th Apr 2017 8:21 pm 

    Makati, why are you always talking about how long you are going to live? I think you talk the talk but your actions tell another story.

  18. makati1 on Fri, 7th Apr 2017 8:31 pm 

    davy, you need to upgrade your psychiatric education. You see what YOU want to see, not reality. Typical American.

    I am proud to have lived this long. Several times in my life, it could have ended. I am proud that I enjoy very good health at my age. You, it seems want to play down the negatives in your life and play up those in others. Always pointing fingers. Never looking in a mirror. I think they have a name for that condition … denial. You pretend that you see the negatives, but you disprove it every time you refuse to see the truth.

    How does it feel to be at least 2/3 of the way through your own life and no happy future retirement to look forward to? Trapped in a dying country that is war mongering all over the planet? Uncomfortable, I bet.

  19. Davy on Fri, 7th Apr 2017 9:11 pm 

    I guess I touched a cord with you makati becuase you are sure rambling on about it. Relax, you maybe got 5 years or so.

  20. makati1 on Fri, 7th Apr 2017 10:11 pm 

    Davy, you never ‘touch a chord’ with me. You are a nothing, blowhard, faux patriot, 1%er. I pity you there in backwoods America. So far to fall and so soon.

    As for my time, I will likely outlive you by a long way. Barring an accident, I have 15 to 20 years to go. You can only hope for that age.

  21. GregT on Sat, 8th Apr 2017 12:11 am 

    “This purported gas attack by Assad is fake Western news to rally world opinion on the side of toppling Assad which remains the goal of US”

    Not the US onlooker. The US deep state.

  22. GregT on Sat, 8th Apr 2017 12:29 am 

    Boat spewed,

    “I do feel a little guilty bashing rag heads”

    You haven’t bashed anybody, and obviously don’t have the slightest fucking clue about Syria. Not surprising considering you don’t have the slightest fucking clue about pretty much anything else. Your crocodile tears are going to come back to bite you in the ass. What comes around goes around Kevin. Karma is a bitch. 🙂

  23. GregT on Sat, 8th Apr 2017 1:17 am 

    Boat on Fri, 7th Apr 2017 6:19 pm

    “Onlooker………..Now little rag head wannabes like you will have much more to complain about.”

    Onlooker displays all of the values, morals, principles, and integrity, of a good American citizen Kevin. It is the fuckheads such as yourself that are giving the rest of your fellow Americans a bad name.

  24. Boat on Sat, 8th Apr 2017 10:44 pm 

    greggiet,

    Like to see onlookers crowds as his anti Jew pro Iran/Syria rhetoric spills out. He better have a lot of security. Lol. You have no clue what the US thinks. We think the Kurds are noble in their efforts at fighting those religious out of control hot heads. Maybe Trump will give them some real weapons like we did Israel.

  25. GregT on Sun, 9th Apr 2017 1:02 am 

    “You have no clue what the US thinks.”

    The US is not an individual Boat. 338 million people have 338 million different thoughts. You do not speak for all of them. Fortunately, there are at least tens of millions of decent American citizens. You are not one of them.

    “Maybe Trump will give them some real weapons like we did Israel.”
    “We think the Kurds are noble”

    We? Fuck are you ever delusional.

  26. GregT on Sun, 9th Apr 2017 1:41 am 

    “We think the Kurds are noble in their efforts at fighting those religious out of control hot heads.”

    Kurdish people in general, are what a brainwashed idiot such as yourself would likely consider to be rag heads. The same with the Saudis. Syrian people not so much, except perhaps for the radical Islamists that the Syrian government is fighting.

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