U.S. Stocks, Oil Affected by Possible Syria Strike
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U.S. stocks made a sharp drop on Tuesday amid speculation of a likely U.S. military strike against Syria for suspected use of chemical weapons.
Oil, which typically is sensitive to Middle East crisis situations, saw its greatest jump in price since the year started because of fears that production will be disrupted due to the strikes.
Two oil stocks, West Texas Intermediate (WTI) Crude and London-based Brent, both saw significant gains with futures trading for the WTI per barrel price climbing to $111.32 for October deliveries (up $2.31).
Brent was also at its highest level since February 25 of this year rising to $116.90 per barrel, a $2.54 increase.
Gold prices also went up in response to the tense situation that exists. They climbed to $1,420 per troy ounce which represents a $3.09 increase.
Also on Tuesday, U.S. Secretary of State John Kerry made it clear that a strike by the U.S. is imminent although he did not allude to the timing. Senior Obama officials stated the administration’s position that it must deter other governments from ever using chemical weapons.
U.S. officials are expected to release intelligence information early Wednesday to confirm their suspicions of chemical weapon use to the public.
The fear is that the Syrian crisis will spread to other parts of the region causing disruptions in production. If this happens, analysts believe that the price of Brent crude may rise to as much as $150 per barrel.
Michael Wittner who is the New York head of oil market research for the bank Societe Generale stated in a report that even if there is no spread of the crisis to other Middle Eastern regions that U.S. crude may still rise to $125 per barrel in the near future.
The U.S. has stated that the strike would be pinpointed on affecting Syria’s capability to strike with chemical weapons and not on a full-scale regime change. There are no plans to overthrow the current Syrian President Bashar al-Assad.
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