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Oil prices soar after US launches missile strike on Syria

Crude jumps as much as 2% to its highest price since early March after attack

A US guided-missile destroyer launching a strike from the Mediterranean Sea. The attack against al-Shayrat military airfield near Homs, Syria, caused oil prices to surge more than 2%. Photograph: EPA

Fri Apr 7 2017 - 14:31

Oil prices surged more than 2 per cent to a one-month high on Friday after the United States launched dozens of cruise missiles at an airbase in Syria, later dropping back as there seemed no immediate threat to supplies.

US president Donald Trump said he had ordered missile strikes against a Syrian airfield from which a deadly chemical weapons attack was launched earlier this week, declaring he acted in America's "national security interest" against Syrian president Bashar al-Assad.

After tepid trading before the attack, international benchmark Brent crude futures jumped to $56.08 per barrel before easing to $55.71 per barrel, still up 1.5 per cent from its last close.

US West Texas Intermediate crude futures also climbed by more than 2 per cent to a high of $52.94 a barrel before receding to $52.56, up 1.7 per cent.

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Both benchmarks hit their highest levels since early March.

"The US cruise missile strikes have seen crude oil jump over 2 per cent in a straight line," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.He said the strikes had potentially big implications for oil markets.

Crude shipments

Syria has limited oil production, but its location in the Middle East and alliances with big oil producers raised worries about spreading conflict that could disrupt crude shipments.

“What will be the response of Iran and Russia, two of the world’s largest oil producers and staunch allies of the Assad regime?... We will have to wait for these answers as the day moves on,” Mr Halley said.

The strikes rattled global markets, and safe-haven products like gold jumped. The US dollar slumped.

"Outside of the energy sector, investors have been moving into defensive sectors today, particularly utilities and gold miners," said Gary Huxtable, client adviser at Australia's Atlantic Pacific Securities.

Russian forces

US officials said the military had fired 59 cruise missiles against a Syrian airbase controlled by Mr Assad’s forces in response to a poison gas attack on Tuesday in a rebel-held area. Officials said the United States had informed Russia the strikes were coming. The strikes did not target sections of the Syrian base where Russian forces were believed to be present.

Russian officials, however, said US-Russian co-operation in Syria was in doubt after the air strikes. – Reuters

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