The report on the use of the chemical weapon by Assad’s regime was confirmed by the US President Barack Obama’s administration and is working with allies including the U.K. and France to agree on limited action against Syria. The National Security Council (NSC) is conducting vote on Thursday on whether to support or not U.S. on the Syrian issue.

The military operation is to be conducted in Syria, the 370,000 barrels per day (bpd) producer of oil, i.e. roughly 0.4 percent of global supplies, and exports less than 150,000 bpd, mainly to Europe.  Syria's current production is estimated at just 50,000 bpd, all of which is refined domestically. Though there are U.S, U.K. and France on one ally, but on the other hand, Russia has support on Assad's government.

Iraq and Azerbaijan other major producer of oil in the Middle East supply  1.2 million bpd or over 1 percent of global supply through the Bay of Iskenderun in Turkey which is a few miles from the border with Syria, is a major export route for crude oil. This route would be affected if Syria holds military attacks by U.S. and its allies. The Port of Beirut in Lebanon has high traffic on oil containers though the cost of transportation through this port costs more than the Iskenderun Bay Port.

Syria though is not a major producer of oil, but being the member of the OPEC, which accounts more than 80% of the world's proven oil reserves located in OPEC Member Countries, the conflict may run over to other Middle East countries. This would cut off the oil supplies in the world oil market and price would rise.

Brent crude for October settlement has rose to 2.5% a barrel on the London-based ICE Futures Europe exchange. Similarly, the West Texas Intermediate (WTI), also known as Texas light sweet, has risen. The WTI for October delivery climbed as much as 67% on NYME yesterday. The geo-political tension in Syria and its predicted effects on the Middle East which accounts about 66% of the OPEC total oil supply is likely to hit the oil prices.

These resonating vibes in the Middle East has impacted the investor’s sentiments in both the spot and future oil market. Investors are with the sentiments of a decreased supply of oil in the world oil market and spot and future’s price are spiking up.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.