US oil prices have increased to over $98 after concern over the conflict in Syria hit a new high. Monday trading pushed the price of oil up to $98.74 per barrel on the New York Mercantile Exchange – the highest price that oil has reached since rates peaked in September 2012.
The increase in pricing was fuelled by American announcements that the nation had increased its aid commitment to Syrian rebels. Syria’s oil production is negligible for the United States – the country produces a quarter as much oil as Texas – but is one of several important geopolitical nations in the Middle East.
Commodity purchasers expressed concern that Syria’s domestic crisis could extend to other nations in the Middle East, potentially disrupting several of the region’s oil hotspots. Of the world’s ten largest oil producers, four are located within the Arabic-speaking world, with many possessing similar government structures to Syria.
Other concerns include the potential for the Syrian conflict to turn into a proxy war between the United States and Russia. Russia is the largest military supporter of the incumbent Syrian government, with the large nation providing military support and resources to the Assad regime.
Many industry analysts have predicted that oil could hit $100 per barrel before the end of the year, fuelled by increasing demand and political instability in many of the world’s largest oil producing nations. Others have suggested that events such as the Iranian election could reduce global crude oil prices due to increased supply.
Other factors influencing global oil prices include the possibility of US-based sources entering the market. Economists have suggested that G-8 leaders focus on domestic oil solutions in order to reduce market prices for many of the world’s top consumers of oil, as well as bring relative stability to the global oil market.
