Oil prices can reach $150 a barrel

Oil prices can reach $150 a barrel
# 30 August 2013 09:52 (UTC +04:00)

In recent days, the price of oil has surged to a six-month high. A barrel of Brent crude jumped 6% to $117 on Wednesday, and compares with less than $100 a barrel as recently as June.

Analysts from the bank Societe Generale suggest the price could eventually surge to $125 if air strikes are launched, and $150 a barrel if the military action disrupts production in the region.

That would be beyond the all-time high of $147 a barrel seen at the height of the financial crisis in 2008.

Bank of America Merrill Lynch has forecast a spike in oil prices of $120-$130 a barrel.

This is despite the fact that Syria's oil production itself is negligible to the global market.

Even before the crisis that now engulfs the country, Syria exported barely 150,000 barrels a day to foreign buyers - mainly the European Union.

That compares with 10 million barrels a day exported by Saudi Arabia, for example, and a global oil consumption rate of 92 million barrels a day.

When sanctions were imposed on the regime of President Bashar al-Assad in late 2011, the exports stopped, and Syria is now estimated to produce just 50,000 barrels per day, and all of it refined domestically.

But the concern among investors is that any Western involvement in Syria may draw neighbouring countries deeper into the fray, and the conflict may spill out beyond its borders.

That could include neighbouring Iraq, which produces a much more significant three million barrels of oil a day - 3% of global consumption.

In Baghdad there are already concerns about the spread of the conflict across its long and porous desert border with Syria.