Understanding Syrian tensions and how they affect oil prices

Why Syrian tensions led to sustained escalated crude prices

Syrian tensions and oil prices

Recent geopolitical tensions in Syria had overshadowed the fundamental supply and demand story with regards to oil prices. While Syria itself doesn’t export significant amounts of oil, its proximity to other major oil producing nations such as Iraq and Saudi Arabia can cause the crude markets to react to geopolitical events there. As we saw with 2011’s Arab Spring, unrest in one region can quickly spread and disrupt normal business operations, including oil production and transportation. Recent escalated unrest in Syria had caused crude prices to remain high—despite any bearish indicators in the fundamental crude supply and demand story. But a recent agreement between the United States and Russia to disarm Syria of chemical weapons may have tempered the risk of oil supply shocks.

2013.09.17 - WTI Crude PricesEnlarge Graph

 

In this series, we’ll provide some background on the Syrian conflict and outline recent news regarding U.S. military action in Syria.