By MOMING ZHOU
West Texas Intermediate crude rose to a two-year high as Russian President Vladimir Putin said his nation will assist Syria if it’s attacked.
This raised concern that escalating tension will disrupt Middle East oil exports.Prices climbed two per cent.
Putin said that Russia may resume deliveries of advanced S-300 anti-aircraft missiles to Syria if US President Barack Obama punishes Syrian President Bashar al-Assad for allegedly using chemical weapons against civilians.
Crude also gained on speculation that the Federal Reserve will limit its stimulus reduction following slower-than-expected jobs growth.
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WTI-Brent
“The involvement by Russia could escalate things and take it beyond Syrian borders,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “The situation in Syria is fluid and that has the market concerned. The disappointing jobs numbers probably make people think that Fed tapering might be delayed.”
WTI for October delivery gained $2.16 (Sh188) to $110.53 (Sh9,616) a barrel on the New York Mercantile Exchange, the highest settlement since May 3, 2011. Prices advanced 2.7 per cent this week. Volume of all futures was 2.5 per cent below 100-day average. Brent for October settlement rose 86 cents, or 0.7 per cent, to end the session at $116.12 a barrel on the ICE Futures Europe exchange. The volume of all futures traded was 1.3 per cent below the 100-day average.
The European benchmark crude was at a premium of $5.59 to WTI, compared with $6.89 yesterday.
WTI increased more than Brent after the US reported yesterday that inventories at Cushing, Oklahoma, the delivery point for New York futures, decreased 1.83 million barrels last week to 34.8 million, the lowest level since February 2012.
“WTI is reacting to consistent inventory draws in Cushing, Oklahoma,” said Soozhana Choi, Deutsche Bank AG’s head of energy research in Washington. “Geopolitical concerns are having a big impact on the oil market.”
Russia, one of Assad’s main international allies, sent an amphibious assault ship to join its forces off the Syrian coast in the east Mediterranean, Interfax news agency reported.
“Will we help Syria? We will,” Putin told reporters today after discussing the Syrian issue with Obama and other world leaders at the Group of 20 summit in St. Petersburg, Russia.
“We are already helping them with weapons and we are cooperating in the economic and humanitarian spheres.”
Global Consensus
There’s increasing global consensus that Syria must be confronted over its use of chemical weapons, Obama said during a news conference at the close of the summit.
The president will make his case in an address to the American people next week.
He is seeking approval from Congress before taking action against Syria. The Senate Foreign Relations Committee voted Sept. 4 for a restricted operation, clearing the way for consideration by the full Senate. US lawmakers are scheduled to reconvene on Sept. 9 after a five-week break. “Geopolitical issues have elevated both WTI and Brent,” said Michael Peterson, managing director at MLV & Co. in Houston. “It’s in no one’s interest to see this spiral out of control.”
The Middle East accounted for about 35 per cent of global oil production in the first quarter of this year, according to the International Energy Agency. Syria borders Iraq and is near Iran, countries that hold almost a fifth of the output capacity from the Organization of Petroleum Exporting Countries, Bloomberg estimates show.
—Bloomberg
