Following indications the United States will likely launch a military strike against Syria, the price of oil has reached a more than two-year high.
Photo: By Chad Teer, Coquitlam, Canada, via Wikimedia Commons
Wednesday in New York it closed at $110.10 per barrel, its highest settlement price since May 3, 2011.
Crude has increased nearly 4% the last two trading sessions and is not far off of levels since the summer and fall of 2008, when oil hit a record of $150 dollars per barrel. This caused diesel and gasoline prices to hit record highs, exacerbating the economic recession.
Overseas, Brent crude closed at $116.16 per barrel, its highest settlement price since February 19th. Brent crude is typically priced higher than the benchmark crude traded in New York.
While Syria is a relatively minor player in the world oil production scene, a U.S. military response over what the Obama administration claims is the use of chemical weapons by the Syrian government against rebels in the country, has raised concern about a possible bigger conflict in the oil-rich Middle East.
This isn’t the first time in the past few years that oil has spiked due to geopolitical situations in the region. It hit around $115 during tensions over Libya and $110 over Iran’s nuclear program. Some analysts say its impossible to predict when this current spike could ease while others say they would not be surprised if Brent crude hits $125 to $150 per barrel due to the current crisis.
It will not be until next Tuesday before it will be possible to gauge what effect the spike has on fuel prices. That’s when the U.S. Energy Department releases its weekly report, delayed one-day due to the upcoming Labor Day holiday.
The most recent report, released Monday, shows diesel has increased for two consecutive weeks, for a national average of $3.913 per gallon, while the ProMiles survey on Wednesday showed the average was $3.924, up 1.1 cent from Tuesday.