Daily Times

Recent political tensions in the Middle East have raised anxiety in crude oil markets. Following the US strikes on an airbase in Syria, oil prices rose by $1.4 from $51.20 to $52.60. But soon the impact was reversed once the market realised that the airstrikes didn’t make much impact on ground realities in Syria. Meanwhile simmering tensions due to the developments in the divided Korean peninsula are further adding to the crude market anxiety.

The developments in the upcoming weeks will continue to have a similar impact on the prices — especially how the US and China respond to the situation. It is speculation that drives the market in such situations. Moreover, Russia will also be an important factor due to its involvement in the Middle East and its somewhat vague stance on North Korea — despite Beijing having enlisted Russia’s help on the latter issue.

The extent of both US and Russian involvement globally will define the future of oil prices. The positive news for the market has been Russian cooperation in limiting its oil production to agreed levels with the Organisation of Petroleum Exporting Countries (OPEC).

OPEC has slashed its output in March by more than it pledged, hoping for a bounce in oil prices. Unless there is a direct and sustained military action by either Russia or the US, the market is unlikely to see a major change. With analysts suggesting that demand is unlikely to drop anytime soon and suggesting a reasonable increase in prices, the OPEC countries will be cautious over their output, especially in the coming weeks. *