Oil prices to jump 4 baht if US hits Syria

Oil prices to jump 4 baht if US hits Syria

Domestic oil prices could rise by three to four baht a litre if the United States launches a military strike against Syria, according to a senior analyst at Siam Commercial Bank's Economic Intelligence Centre.

Members of the Canadian Syrian community hold a candlelight vigil, protesting the possible invasion on Syria, in Ottawa on Saturday. (AP Photo)

Sivalai Khantachavana said on Sunday that if the US Congress approves military action in Syria, Brent crude may soar to US$125 (4,000 baht) per barrel.

Brent crude could reach $150 a barrel if the US-led attack affects neighbouring countries, particularly Iraq, one of the world's largest oil producers. However, the price hike would be only for the short term because the Organisation for Economic Co-operation and Development (OECD) member countries would release oil reserves to ease oil supply disruptions, she said.

"Retail oil prices could go up by three to four baht litre, causing product prices to rise further and an increase in world inflation to 2.5 to 2.8%, from 0.2 to 0.5%," Mrs Sivalai said.

Kritrat Hiranyasiri, chairman of MTS Gold, said the gold market was still awaiting the US decision regarding Syria and the US Federal Reserve's decision on implementing the quantitative easing (QE) stimulus.

The build-up toward another intervention by Western powers in the Middle East has pushed oil prices to a two-year high. West Texas Intermediate crude rose 2% to $110.53 per barrel on Friday. Brent for October settlement rose 86 cents, or 0.7%, to end the session at $116.12 a barrel on the ICE Futures Europe exchange.

On Friday, the New York gold futures prices increased $13.50, or 1%, to stand at $1386.50 per ounce.

Russian Involvement

The possibilities for Russia's involvement, said US officials familiar with the matter, include more verbal support from President Vladimir Putin, sending one of its ships to dock in the Syrian port of Tartus, and speeding new shipments of anti-aircraft missiles or radars to Syrian President Bashar al-Assad’s forces. The officials asked not to be identified discussing intelligence matters.

"The involvement by Russia could escalate things and take it beyond Syrian borders," Kyle Cooper, director of commodities research at IAF Advisors in Houston, said. "The situation in Syria is fluid, and that has the market concerned."

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