- US President Trump told Russia to “get ready” for military action in Syria in a tweet on Wednesday.
- Both Brent and WTI oil spiked on the news amid fears about what this could mean for supply.
- See oil prices in real time here.
LONDON – Oil prices spiked Wednesday after US President Donald Trump hinted at possible military engagement with Russia in Syria and explosions were reported over the capital of Saudi Arabia.
West Texas Intermediate hit its highest level since 2014 shortly after Trump tweeted: “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”
Trump followed up his tweet with another saying the US’s relationship is “worse now than it has ever been, and that includes the Cold War.”
Oil climbed further later in the morning US time after reports that missiles were intercepted above Riyadh, the capital of Saudi Arabia.
West Texas Intermediate and the global benchmark, Brent oil, were both up by more than 2% at just after 11.00 a.m. ET (4.00 p.m. ET).
Fawad Razaqzada, a technical analyst at FOREX.com, said in an email shortly after Trump’s tweet: “Fears that the supply of crude could be interrupted as a result is the main reason behind the oil price rally.
“Oil prices have been further supported by the OPEC’s reduced output. However, with US oil production set to rise further in the coming months, the global oil market will likely remain amply supplied in the long-term.
“We, therefore, think that oil prices will struggle to rise significantly further, although in the short-term price spikes are possible given the heightened possibility of military action in Syria. The fact that both Brent and WTI are testing or approaching their previous 2018 highs means there is also the possibility of at least a short-term breakout as resting buy stop orders are tripped.”
Trump’s escalation of tensions with Russia comes after a suspected chemical weapons attack carried out by Syria’s Bashar al-Assad against his own people last week. Russia is allied with Assad and has sort to warn the US off any action in response to the attack.
Lukman Otunuga, a research analyst at FXTM, said: “While oil is likely to remain supported by geopolitical risk and a vulnerable U.S Dollar for the moment, soaring U.S Shale production has the ability to cap upside gains.”
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