While Syria makes only 0.04% of global petroleum supplies - less than Cuba, New Zealand or Pakistan - it calls one of the world’s biggest producing regions its neighbourhood.
The nation borders Iraq, the second-biggest member in the Organisation of Petroleum Exporting Countries, while other producing giants such as Saudi Arabia and Iran lie just beyond. The Turkish port of Ceyhan, from where shipments including those from Kurdistan are exported, is also close. Apart from its proximity to the Middle East nations, the ongoing conflict in Syria involves Russia and the US, two other major crude producers.
Global oil prices jumped more than 2% on Friday on news the US launched a cruise missile attack against the nation, two days after Bashar al-Assad’s regime used poison gas to kill scores of civilians. The task of military planners was made riskier by the presence of Russian forces in Syria who support Assad’s regime in its battle against rebel groups, which include Islamic State and Al-Qaeda fighters but also some backed by the US.
“Given that two big producers - the US and Russia - are involved, potentially on opposite sides, geopolitical risk has certainly increased and this is getting reflected in prices,” said Tushar Tarun Bansal, director at industry consultant Ivy Global Energy. “If, after the initial strikes, there is no further action by the US, prices will slip back to where they were prior to the strike.”
Syria produced about 35,000 bpd of oil and some other petroleum liquids in 2016, making it the 66th biggest producer, according to the US Energy Information Administration. While output averaged 400,000 bpd between 2008 and 2010, the combined disruptions from military conflict and economic sanctions on the nation have led to declines, the Energy Department’s statistical arm said on its website.
Brent, the benchmark grade for more than half the world’s crude, gained as much as 2.2% to $56.08 a barrel on the London-based ICE Futures Europe exchange on Friday. West Texas Intermediate futures, the US marker, advanced as much as 2.4% to $52.94 on the New York Mercantile Exchange and were at $52.52 at 6pm Singapore time.
The gains may be short-lived, with factors such as US inventory and production levels as well as whether Opec’s production cuts with its partners will be extended influencing prices more in coming days, according to Ivy Global’s Bansal.
“As long as the military action in Syria is well-contained (not spreading into Iraq), and Syria is no longer a significant oil producer, any big spikes in oil prices could prove temporary,” Gordon Kwan, a Hong-Kong based analyst at Nomura Holdings Inc, said in an e-mailed note on Friday.
Oil has struggled to extend a rally beyond $51 a barrel in the past week as concerns over record US inventories and rising American production countered optimism Opec’s production cuts will ease a global glut.
“Opec is the wildcard, and the market is currently pricing an extension of the cuts,” said Ivy Global’s Bansal. “So, although it looks unlikely at this stage, in case Opec decides to not extend the cuts, we could see some severe price response.”


Here’s what Trump’s Syria strike did to markets
Bloomberg
Beijing/Sydney




Traders were preparing for an important day on Friday, with the key US monthly jobs report and the first Sino-American summit since Donald Trump took office set to offer direction.
Then Trump launched a missile attack against Syria.
The move triggered an instant reaction across everything from stocks to commodities and currencies. While some of the initial moves have tapered off - for example, Korean won losses have eased - the strike raised questions about Trump’s broader foreign and national-security strategy. It came just as he was about to meet his Chinese counterpart, Xi Jinping, where North Korea’s nuclear programme were likely to be on the agenda. The US hasn’t ruled out unilateral action against the “nuclear-armed North Korea.”
“The markets will just be very jittery all day,” said James Audiss, senior wealth manager at Shaw and Partners Ltd by phone from Sydney. “Markets have been looking for a reason to sell off. The uncertainty that surrounds this gives them a definite cause to do that and there’s absolute spillover into the South Korean market because of the North Korean situation.”
The MSCI Asia Pacific Index added 0.2% as of 7pm Tokyo time on Friday, after fluctuating between an intraday high of 0.5% and a low of 0.3%. Benchmarks in Hong Kong, Taiwan, India and Indonesia declined. Japan’s Topix index initially pared gains, but rose 0.7% at close.
Emerging-market currencies fell on the news, with the won leading declines in Asia. South Korea’s currency is now little changed, after slipping as much as 0.6%.
Gold is driving a strong rally in precious metals, favoured in times of uncertainty for their fixed returns.
“Whether the market reaction is temporary or will continue will depend on the reactions from the international community,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd. “We can’t see that at the moment so it’s hard to digest. Investors are probably preparing to escape to safe havens when the next news strikes.”
Likewise, government debt is finding bids, led by the US.
Elsewhere in currencies, the yen is being favoured over other havens given news of the missile launch landed at the start of the Asian trading day.
The prospect of an uptick in tensions in the Middle East buoyed oil prices, with global oil prices jumped more than 2% on Friday.
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