The US missile strike against Syria has caused oil prices to surge to a four-week high. After the strike, the price stood at $55.57 a barrel. The increase has benefited oil and gas contractors and companies across the world.
However, most analysts claim that the increase in the oil price is a kneejerk reaction from the oil and gas industry. A few days prior to the US strike, oil prices were increasing steadily. However, right after the US military action against the Syrian Government, the prices soared.
Thomson Reuters Head of Oil Research Shakil Begg pointed out that the US action in the Middle East was responsible for causing the price to increase. However, he also said that if the oil and gas industry loses focus on the factors that were responsible for lowering oil and gas prices, it will cause the prices to plunge again.
Begg stated that the US air strike has caused concerns that the conflict will spread to other oil-producing countries in the Middle East. He said that this is the main reason that the prices have increased. While Syria’s oil output is negligible, neighbouring Iraq and nearby Iran and Saudi Arabia are leading suppliers of oil to the global market.
The price increase has continued even though oil and gas contractors and companies in the US have increased their production. Analysts believe that this will help shale gas producers to benefit as they can get back into the business with vigour. At the same time, analysts claim that with shale gas supplies increasing, it will have an impact on the historic agreement signed by OPEC and non-OPEC nations.
Begg pointed out that the perception that the deal between OPEC and non-OPEC countries was removing the worldwide surplus of oil may prove to be mistaken.