April 11 (UPI) — Geopolitical risk factors over a looming multilateral engagement in Syria and warnings of the risk of protectionism sent oil prices higher early Wednesday.
U.S. President Donald Trump took to Twitter early Wednesday to warn Russia that a missile strike on Syrian targets was under consideration.
“Russia vows to shoot down any and all missiles fired at Syria,” he stated. “Get ready Russia, because they will be coming, nice and new and ‘smart!’”
The tweet sent oil prices up more than 1 percent, but moderated after he later walked back the rhetoric by calling on “all nations to work together.”
A Syrian conflict could draw in Iranian and Russian interests and proceed along the western front of Iraq, one of the largest oil producers in the world.
“Nothing says risk like talk of a missile attack on the door steps of big oil producers,” Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, told UPI.
The price for Brent crude oil was up 0.56 percent to $71.44 per barrel as of 9:15 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.66 percent to $65.94 per barrel.
Crude oil prices gained more than 3 percent during trading Tuesday, spurred on by Syrian tensions and a thaw in U.S-Chinese trade relations.
Speaking at the University of Hong Kong, International Monetary Fund Managing Director Christine Lagarde warned that protectionism by way of trade restrictions was an economic game that no one can win.
“Not only do they lead to more expensive products and more limited choices, but they also prevent trade from playing its essential role in boosting productivity and spreading new technologies,” she said in her prepared remarks. “Each country has a responsibility to improve the trade system by looking at its own practices and by committing to a level playing field where everyone follows the rules.”
Trade tensions between the United States and China, the two leading economic powers, involve tens of billions of dollars in potential trade tariffs. U.S. import tariffs have already spilled over into key domestic sectors, like pipeline groups, that are fretting over the escalating costs of materials.
Depending on Syrian developments, the price of oil may be influenced later in the day when the U.S. government publishes data on crude oil inventories. The American Petroleum Institute reported U.S. crude oil inventories gained 1.7 million barrels last week and gasoline inventories swelled 2 million barrels.
Inventory levels are indicative of supply and demand. The Organization of Petroleum Exporting Countries is working to erase the market surplus that pushed oil below $30 per barrel two years ago, though that effort has been offset somewhat by U.S. oil production gains.