Daily Times

Oil fell nearly 2 percent on Monday after U.S. drilling activity rose and fears waned about escalating tensions in the Middle East following air strikes on Syria over the weekend.

The United States, France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7. The oil price had risen nearly 10 percent in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks.

By 0851 GMT on Monday, Brent crude oil futures slipped $1.34 to $71.24 a barrel, while U.S. crude futures were down $1.16 at $66.23 a barrel.

“As far as developments in Syria are concerned, the market has had a sigh of relief in the sense that there is no escalation, either diplomatically, or on the ground, following the intervention by the U.S., France and the UK,” said BNP Paribas global head of commodity market strategy Harry Tchilinguirian.

“As a macro asset-allocator, if you want to hedge your portfolio against geopolitical risk, your prime candidate is oil, especially if that risk is in the Middle East.”

Although Syria itself is not a significant oil producer, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge. “Investors continued to worry about the impact of a wider conflict in the Middle East,” ANZ bank said.

Published in Daily Times, April 17^th 2018.