Oil prices rise amid Syria 8217 s escalating conflict
Russia and the United States are both conducting bombing campaigns.
Oil prices rose today (October 2nd) amid fears about the escalating violence in Syria. The global benchmark Brent gained 47 cents to $48.16 (£31.78) a barrel overnight. US crude added 74 cents at $45.48 a barrel.
The oil market reacted to the situation in Syria, where Russia and the United States are conducting bombing campaigns.
On September 30th, Russia's parliament approved a request by President Vladimir Putin to launch air strikes in the middle-eastern nation. Mr Putin said Russia was acting "preventatively, to fight and destroy militants and terrorists on the territories that they already occupy, not wait for them to come to our house".
Russia claims strengthening and securing the president Bashar al-Assad will help the country focus on dealing with the terror group. Meanwhile, hundreds of Iranian troops in Syria joined a ground offensive in support of government forces.
Helima Croft, chief strategist at Royal Bank of Canada told CNBC the market reaction has been "relatively anticlimactic".
Markets remain muted
"You have some of the biggest oil producers squaring off in this battle," she said. "And again, the market reaction still has been quite muted given the stakes that are at play right here. One of the things you have to remember is we have four active wars in the Middle East right now, and the market really has shrugged it off largely. If this had been a couple years ago, if you did not have a supply overhang in the market, people would be a lot more concerned," she added.
Jim Rodgers, the chairman of Rogers Holdings, who correctly predicted a commodities rally in 1999, agrees. He told Bloomberg: "When there's bad news and something doesn’t decline, it usually means it's at a bottom and will be turning. Whether we’re at a turning point or not, I don't know yet and I’m watching this very closely."
The price of oil has taken a sharp dive in recent months. From 2010 to mid-2014, the average price of a barrel of oil was around $110 (£71) but the remainder of last year and 2015 saw prices plummet. US crude oil has now fallen to around $45 a barrel.
This is due to a growing oversupply due to weakening demand in industrialised countries following the financial crisis.
The glut has prompted a number of meetings between members of the Organization of Petroleum Exporting Countries (Opec). Nations such as Saudi Arabia and non-member Russia opposed a cut in production to boost prices and the production levels were maintained.
The International Energy Agency expects that world oil stocks will continue to build until at least the end of 2016.