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Page added on August 28, 2013
Oil could hit $150 if Syria war spreads
Brent crude oil is likely to rise towards $125 a barrel if the West launches air strikes against Syria and could go even higher if the conflict spills over into the rest of the Middle East, Societe Generale said on Wednesday.
Michael Wittner, oil analyst at the French bank, said the North Sea crude oil benchmark could surge as high as $150 per barrel if the war affects key oil producers such as Iraq, although any jump in prices would probably be brief.
“We believe that in the coming days, Brent could gain another $5-10, surging to $120-$125, either in anticipation of the attack or in reaction to the headlines that an attack had started,” Wittner said in a note to clients.
“If the regional spill-over results in a significant supply disruption in Iraq or elsewhere, Brent could spike briefly to $150,” he added.
“In our base case, we assume an attack begins in the next week. If it takes longer, and there are no signals that an attack is imminent, the oil price uplift from the entire Syrian situation will start to fade.”
Brent crude oil futures for October hit a six-month high of $117.34 on Wednesday on fears that a regional conflict could affect supplies at a time of restricted output from other oil producers in the Middle East and North Africa.
Wittner said if oil supplies were curtailed by a military conflict the oil market would rely on extra output from Saudi Arabia, the only member of the Organization of the Petroleum Exporting Countries with sufficient spare oil production capacity.
“The Saudis could handle most likely scenarios, but the markets will look at the shrinking spare capacity that remains after any disruption is made up, and that would be bullish.”
Wittner said oil consumer countries might consider releasing part of their considerable strategic oil reserves if oil prices rose too high or supply shortages became acute.
11 Comments on "Oil could hit $150 if Syria war spreads"
bobinget on Wed, 28th Aug 2013 11:10 pm
The last time NYMEX hit $147. we nearly croaked.
Adjusted for inflation, this time we might see $160. before everyone throws in the towel. I see our computer overlords managed to keep oil in check today. I was hoping for a few more days if Congress was brought back to vote but no luck. President O is nothing more then a slightly smarter President Dubbya. Allowing Assad/Putin
to sucker us to a rope-a-dope play like this one will mean CIA better look for a new head spy.
This Syrian situation is most certainly not temporary like even a GOM hurricane this September. Most oil stocks did not react at all Tuesday and only about up 1.5% today. No one informed traders Saudi Arabia, Iran, Iraq, Syria, Egypt, Russia are on different sides. Don’t tell them. They’ll never find out watching CNBC.
Both denial of ME oil AND and a class 4 storm in the Gulf of Mexico could have us all rushing out for ‘Depends’.
actioncjackson on Thu, 29th Aug 2013 12:17 am
How our species has chosen to use oil is the punchline to a cosmic joke. They are laughing at us! Our current reality is the most idiotic way it could have been done. The world racks a disciprine. There is no honor anymore.
westexas on Thu, 29th Aug 2013 12:29 am
Monthly Brent prices exceeded $100 for six months in 2008, where as monthly Brent prices have exceeded $100 for 29 of the past 31 months.
GregT on Thu, 29th Aug 2013 1:43 am
Anyone that hasn’t quite figured out yet, where we are headed, is going to be in for an extremely unpleasant future.
The time to start planning, is running out.
BillT on Thu, 29th Aug 2013 1:50 am
$200 oil by Christmas…
DMyers on Thu, 29th Aug 2013 1:56 am
Clearly, conflict in the Middle
East will tend to increase the price of oil. “…[A]ny jump in prices would probably be brief,” Wittner assures. I’m not so sure about that, because raising the price of oil may be what this is all about. Imagine the following conversation between Joe the politician and Sam the oilman insider.
Sam: “Joe, we’re having industry problems over what it’s costing to bring out this fracked oil and get it refined. We need a much higher price for oil, or Peak Oil will be back, and we’ll be the joke of the world.”
Joe: “Not to worry. We’re gonna have that price of oil up for you sometime this week.”
Sam: “You mean Syria?”
Joe: “Exactly. They’re going in, big time. The price of oil will sky rocket. Should more than cover the fracking premium.”
Sam: “Great news. We can blame the conflict for rising prices and never have to tell anyone that they had to rise to cover our costs.”
Joe: “And don’t worry about the price coming down soon. We can probably keep this next war going for a decade or more.”
Speculation, of course, but war does make a good smokescreen for hiding the real reason behind rising oil prices: growing scarcity of conventional and high production costs for unconventional oil.
And if you want to say Saudi Arabia is “the only member of the Organization of the Petroleum Exporting Countries with sufficient spare oil production capacity,” go right ahead, but there’s a lot less spare capacity there than you want to believe.
DC on Thu, 29th Aug 2013 3:40 am
Syria was is small potatoes as far as oil production goes, but of course the market has to ‘react’ to US warmongering regardless. Both Egypt ( a net importer) and Syria, another niche producer, have little count for little in world markets.
But, a rigged market like ours are, loves wars, the ultimate smoke screen like DM points out.
But of course, the US and its satraps dont want broken apart for its paltry oil reserves now do they? They have there eye on bigger prizes. Brutalizing the people of Syria is just a means to an end for amerika. But, if oil is gonna spike, why not go for $200.00. If peak oil isn’t doing the job fast enough, amerikas terrorism will have to do in the meantime.
curlyq3 on Thu, 29th Aug 2013 6:20 am
Chemical weapons deployment in the Middle East supports a Zionist response … I would bet that the Israelies could decapitate every Arab and Persian Enemy or any other that would lift a sword to them … by now they probably have a nuclear weopon in every capital city of the world just waiting to be detonated … the Mossad and their helpers are everywhere … (“By Way Of Deception, Thou Shalt Do War.”) … curlyq3
dave thompson on Thu, 29th Aug 2013 7:01 am
Yes the corporate/government with the help of the media, all point to a war. No talk of solution/resolution for peace. I agree that the power masters are at work pulling the strings to make $150+ oil the new normal.
Mike on Thu, 29th Aug 2013 10:56 am
The US will back out I’m reckoning. Too much to lose and so little to gain. Yes they will look weak for going back on their threat but that is small change compared to the start of WW3. This could be the moment though were other nations start to realise that America has run out of the money and energy to be world police.
bobinget on Thu, 29th Aug 2013 6:14 pm
Most Americans would side with Mike, as do I.
I should add Brits and French people also are overwhelming against this attack on Syria.
Russia is sending a huge armada into the Med as a response. Gunboat diplomacy strikes again.