Oil is about to take off
Published on 12.04.2018 15:45

The oil price has pulled back today after hitting a 3 year high in yesterday’s trading session but the drop is seen as temporary as the US gears for missile strikes against Syria after the former launched a chemical attack against it’s own people..

The Majority of Oil supplies come from the middle east where Syria is located and even before this event the US was threatening to re-impose sanctions against Iran for their alleged Nuclear Weapons program which would drastically cut the amount of supplies from the region.

Now with a potential war in the making, analysts predict that the price of oil will be dictated by the size of the conflict and how many countries get involved.

If the conflict is contained to Syria the oil price may not have much further to go, but if it should spill over the borders or Iranian facilities are targeted the potential for oil to soar past $100 is a real possibility.

"We're at the pivot point. It's a binary outcome. If it's a pinprick in Syria, we've seen the price gains. We'll sell off afterwards. If Iranian assets, in particular in Syria, get hit, it's a game changer," said John Kilduff, energy analyst and founder of Again Capital.

"If this is all contained to Syria we've probably seen the bulk of the rise. The issue you get into is if there's a strike on Iranian assets in Syria, a direct hit on Saudi, or a scenario where the Saudis and Israelis team up to take it to Iran directly, that's where you get into triple-digit oil price land," he added.

Russia has vowed to back Syria in the conflict and has vowed to shoot down any missiles that are launched against the country as well as take out the bases where they came from.

Seeing as the missiles would be launched from a US ship it means that the Russians are prepared to attack the American military who would respond with alarming force creating an all-out war and we would see oil prices soar to highs that haven’t been seen in many years.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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