Crude prices not a problem yet

The threat of an imminent attack on Syria has affected crude production more than crude prices so far. Yesterday, the price of a barrel of Brent crude rose above 117 dollars momentarily, which has not happened since February, before falling to nearly 115 dollars later in the day.

Texas crude, which is the price referent in the United States, opened with slight gains and its value moved to around 110 during the day. The fluctuations are moderate considering current tensions in the Middle East, no doubt because the US Department of Energy is guarding against price volatility by announcing that its weekly reserves have increased by three million barrels compared to the 750,000 barrel increase that oil experts predicted.

Obama's strategy to limit an attack on Syria to bombardments of chemical plants and defense operations and not go after government buildings in Syria is having a calming effect on the oil markets, which closed the day with minor losses. Recent political tensions have cut crude oil production by two million barrels per day, which is a trivial loss considering that around 90 million barrels are produced daily.

While the conflict is still not a major threat to major international economies, the situation could change if tensions with Syria spread to bordering oil-producing nations such as Iraq and Lybia. A contagion would thwart economic growth in the area, which has already been slowed down by emerging economies that are trying to climb their way out of recessions. If oil prices continue to rise, the oil companies will be the most interested as they are forced to reasess the value of their annual inventories.