Brent oil price hangs at $106 a barrel as traders eye Syria conflict

Brent crude oil opens today’s trading session at 11 week highs around $106 a barrel as traders price in possible US involvement in Syria’s civil war which could in turn draw in Middle Eastern states which are a hub for around a third of the world’s oil supply.

Latest Brent Oil Price

In London, Brent crude oil futures for August 2013 delivery was trading at $106.09 a barrel, 07:30 GMT this morning on the ICE Futures Exchange after trading as high as $106.24 yesterday.

Syria Conflict & Oil Prices

The market was rangebound on Tuesday, testing resistance and support levels after reaching new highs, having hit those new highs due to possible US involvement in Syria’s civil war, according to Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

“The potential for the US and its allies to begin arming Syrian rebels is what pushed us into this new trading range,” Armstrong said.

The US is considering to increase aid to Syrian rebels who have been fighting against the regime of President Bashar al-Assad in a bloody civil war. The Syrian conflict has become a proxy for warring Middle Eastern factions. Investors fear oil supply disruptions if other Middle Eastern nations are drawn into the conflict.

The geopolitical tensions in Syria as well as Turkey are helping to keep oil prices at multi-month highs, analysts at Commerzbank wrote in a note. “Syria and Turkey may not be significant oil producers, but they do play an important role in the region’s overall stability,” the analysts wrote, adding that the friendlier signals sent by Iran’s newly elected president have been virtually ignored.

No Consistent Trend

“We’re seeing a lot of sideways to higher price chop rather than any more powerful or consistent trend,” said Tim Evans, energy futures specialist at Citi Futures and OTC Clearing, referring to oil’s action in the last few days.

Factors driving oil prices include the increased attention on Syria, along with the almost conciliatory rhetoric coming from Iran’s Rohani, Evans said. The US decision on aiding Syria’s rebels has heightened the oil market’s sense of geopolitical risk.

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Brent oil price hangs at $106 a barrel as traders eye Syria conflict