Oil futures surged more than 2 percent to a one-month high on Friday after the United States launched dozens of cruise missiles at an airbase in Syria, with prices later dropping back as there seemed no immediate threat to supplies.
U.S. President Donald Trump said he had ordered missile strikes against a Syrian airfield from which a deadly chemical weapons attack was launched earlier this week, declaring that he acted in America’s “national security interest” against Syrian President Bashar al-Assad.
After tepid trading before the attack, Brent crude futures LCOc1 jumped to $56.08 per barrel, in what traders called a knee-jerk reaction, before easing to $55.51 per barrel at 0623 GMT, still up 1.1 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 also climbed by more than 2 percent, to a high of $52.94 a barrel, before receding to $52.35, up 1.26 percent.
Both benchmarks hit their strongest levels since early March.
“The U.S cruise missile strikes have seen crude oil jump over 2 percent in a straight line,” said Jeffrey Halley of futures brokerage OANDA in Singapore.
Although Syria has limited oil production, its location in the Middle East and alliances with big oil producers raised worries about spreading conflict that could disrupt crude shipments.
“What will be the response of Iran and Russia, two of the world’s largest oil producers and staunch allies of the Assad regime?” Halley asked.
Russia and Iran both condemned the American attacks.
The strikes also rattled global markets. While safe-haven products like gold jumped, stock markets and the U.S. dollar slumped.
“Outside of the energy sector, investors have been moving into defensive sectors today, particularly utilities and gold miners,” said Gary Huxtable of Australia’s Atlantic Pacific Securities.
U.S. officials said the military had fired 59 cruise missiles against a Syrian airbase controlled by Assad’s forces, in response to a poison gas attack on Tuesday in a rebel-held area.
Officials said the US had informed allies and Russia before the strikes and that they did not target sections of the Syrian base where Russian forces were believed to be present.
In oil supply fundamentals, markets remained oversupplied, even with efforts led by the Organization of Petroleum Exporting Countries (OPEC) to cut supplies to prop up prices.
Oil trading data in Thomson Reuters Eikon shows that globally shipped crude volumes stood at 1.4 billion barrels in March (around 45.6 million bpd), up from 1.1 billion barrels in February, although on a daily basis the figure was similar to February’s 45.5 million bpd due to that month’s fewer days.
Shipped oil flows also remain higher than at any time during the second half of 2016, before the OPEC-led cuts were implemented, implying either poor compliance with the supply reductions, or plentiful alternative supplies.