Brent crude oil is likely to rise towards $125 a barrel if the West launches air strikes against Syria and could go even higher if the conflict spills over into the rest of the West Asia.
Michael Wittner, an oil analyst at French bank Societe Generale, said on Wednesday that the North Sea crude oil benchmark could surge as high as $150 per barrel if the war affects key oil producers such as Iraq, although any jump in prices would probably be brief.
“In our base case, we assume an attack begins in the next week. If it takes longer, the oil price uplift from the entire Syrian situation will start to fade,” he added.
Brent crude oil futures for October hit a six-month high of $117.34 on Wednesday on fears that a regional conflict could affect supplies at a time of restricted oil output from the West Asia and North Africa.
Wittner said if oil supplies were curtailed by a military conflict the oil market would rely on extra output from Saudi Arabia, the only member of the Organization of the Petroleum Exporting Countries (Opec) with sufficient spare oil production capacity.
“The Saudis could handle most likely scenarios, but the markets will look at the shrinking spare capacity that remains after any disruption is made up, and that would be bullish,” he added.