Oil hits 3-year high as Syria crisis rocks the markets
THE price of oil surged to its highest level for more than three years last night as tensions over Syria escalated.
Brent crude hit $72.71 a barrel as traders fretted about a stand-off between the West and Syria and its allies, including Russia.
Conflict in the Middle East would wreak havoc in the oil trade and drastically reduce supply, meaning producers could demand a higher price.
It would cause misery for British motorists, who have already had to put up with higher prices at the pump.
Household energy bills could also go up again if the cost of crude continues to rise.
That would spell further woe for families just days after British Gas announced plans to put up gas and electricity bills by 5.5pc, or £60 a year for the average household.
Oil has been climbing since January 2016, when it fell below $28 a barrel, amid a production war between US and Middle Eastern producers.
But the latest spurt on Syria fears took crude back to levels not seen since November 2014.
Simon Williams of the RAC said that if the rise continues it could herald a return to late 2014 unleaded prices of 123p a litre and diesel of 127p.
Unleaded has already risen from around 114p a litre to 121p a litre since last summer. ‘A sustained jump in the price of oil would be bad news for motorists,’ said Williams.
Luke Bosdet of the AA said a rise will also hit retailers. He said: ‘UK families will have to find the extra money from somewhere else in their budget, which then takes money away from what they might spend on the High Street so that they can stay on the road.’
Fears over conflict in Syria come after the US slapped fresh sanctions on Russian firms and oligarchs with links to the Kremlin.
The Russian rouble has tumbled to a 16-month low and is on course for its worst week since 1999. The US is taking aim at President Putin and his allies following Russia’s annexation of Crimea, support of Syrian dictator President Bashar al-Assad, and alleged attempts to ‘subvert Western democracies’. It comes in the wake of the poisoning of former spy Sergei Skripal and his daughter Yulia in Salisbury.
On Wall Street the Dow Jones was off 0.9pc, or 218.55 points, at 24,189.45 – with markets shaken by an incendiary tweet from President Donald Trump, saying: ‘Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!”’ Yana Barton, of US asset manager Eaton Vance said: ‘It’s shock and awe – tweets will continue, headlines will continue. Guess what? Volatility is the new norm.’ Gold, a traditional safe haven in times of trouble, nudged up 0.5pc to $1,339 per oz and the Japanese yen, also seen as safe because the country’s neutral status is reckoned to keep it out of dangerous wars, rose 0.2pc on the dollar. There was more calm in Britain, with the FTSE 100 closing down 9.61 points at 7257.14 amid uncertainty over whether the UK would join any military action.