Crude oil prices jumped Friday morning after the US military’s missile attack on a Syrian government base.
The US fired a barrage of cruise missiles at Syria in a response to a chemical weapons attack for which security sources blame Syrian leader Bashar al-Assad.
Brent crude futures were up 28 cents at $55.17 a barrel after reaching an intraday peak of $56.08. On the other hand, U.S. West Texas Intermediate (WTI) crude futures were up 37 cents at $52.07 a barrel, having reached an intraday high of $52.94.
“Oil markets are back in bullish mode after the setback of the previous weeks. This news flow seems to bring geopolitical risks back on the radar,” said Frank Klumpp, oil analyst at Landesbank Baden-Wuerttemberg, based in Stuttgart.
Oil, foreign exchange, gold and bond markets reacted strongly to the attack but reversed some gains after monthly U.S. employment figures.
Geopolitics and oil prices
The supply side of the oil market is particularly prone to geopolitical influences and resulting supply shocks.
Although Syria produces marginal amounts of oil, due to its proximity to Iraq, spreading of the military conflict might induce a higher risk premium on oil prices.
In case the U.S. stays limited to the above-mentioned airstrikes, oil prices will not be affected much. On the other hand, if the U.S. gets more involved, the upside risk will be augmented.
Gold prices jump to five-month high
Gold hit a five-month high on Friday after U.S. jobs data decreased expectations that the U.S. Federal Reserve will raise interest rates.
Spot gold rose to $1,269.28, its highest since November 10, and was on track for fourth straight week of gains.
Gold was also supported by investors looking for safe-haven after the United States fired cruise missiles at a Syrian air base.
Gold is frequently used as a hedge against political and financial uncertainty and security risks. It has benefited along with other assets which are considered safe, such as yen and U.S. Treasury bonds.