Oil hits 28-month high in US on Syria tensions

07 september 2013, 12:56
Crude-oil prices surged higher Friday amid US-Russia tensions over a potential military strike on Syria, pushing the US contract to a 28-month high, AFP reports.

The New York benchmark, West Texas Intermediate (WTI) for October delivery, shot up $2.16 to close at $110.53, the highest level since May 2011.

In London trade, Brent North Sea crude for October gained 86 cents at $116.12.

US President Barack Obama and Russian counterpart Vladimir Putin remained at loggerheads Friday over US plans for military action in response to Syria's alleged August 21 chemical weapons attacks against its own civilians.

At a meeting of the Group of 20 major economies in St. Petersburg, Russia, Putin said, after unscheduled talks with Obama: "Each of us kept with our own opinion."

The split among leaders of the world's 20 top emerging and developed economies over the issue was on display in a statement by 11 member countries that called for a "strong international response" to the chemical attack, without specifying military action.

"The animus between Putin and Obama is bringing back concerns of an escalation (in the situation) about Syria," said James Williams of WTRG Economics.

While Syria is not a significant oil producer, markets were concerned that a military strike could have unintended negative consequences in the oil-rich Middle East.

"Brent crude oil remained above $115 per barrel... supported by fears that a US military strike on Syria could spread unrest in the Middle East and disrupt energy supplies," broker Marex Spectron said in a note to clients.

The highly anticipated US jobs report for August came in weaker than expected.

Though the unemployment rate ticked down a tenth point to 7.3 percent, only 169,000 jobs were added, missing analyst expectations of 177,000.

Still, most analysts said they expected the Federal Reserve to begin to taper its massive monetary stimulus, known as quantitative easing (QE), perhaps as soon as this month.

"Today's key economic data release left market players even more confused regarding the timing of QE tapering," said Fawad Razaqzada of GFT.

In other oil market news, Shell said it would begin compensation talks next week with thousands of Nigerian villagers who say their livelihoods were ruined by two massive 2008 oil spills in the Niger Delta.

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