Syria conflict is pushing oil prices higher. On Tuesday, Oil price jumps roughly 3% an 18-month high, as U.S. and its allies consider a military strike on Syria following the country’s suspected use of chemical weapons.
Syria is not a major oil producer, but there’s a spill-over risk if neighboring nations become engulfed in the conflict. Saudi Arabia produces nearly 12 million barrels of crude a day. Iraq and Iran are also big producers.
While global stocks have been selling off, equity markets in the Middle East have been posting the most dramatic declines. The benchmark index in Dubai has tumbled by 7%, while markets from Abu Dhabi to Bahrain to Kuwait also moved roughly 1% to 3% lower Tuesday.
Oil prices are hovering near historic highs, squeezing economic recovery in Europe and swelling the financial power of leading members of the Organization of the Petroleum Exporting Countries, including Saudi Arabia. The sovereign wealth funds of the United Arab Emirates, Saudi Arabia, Qatar and Kuwait have climbed to more than $2 trillion, up $420 billion over the past two years, according to industry newsletter Petroleum Argus.
The price of the more widely used international benchmark called Brent crude also jumped on Tuesday, to $113.95 a barrel. It has risen sharply since late June.