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As U.S. military personnel prepare for possible action against Syria, Brent oil prices are hovering near an 18-month high.
On Thursday, Brent oil prices retreated slightly, but remained elevated, after starting the day above $116 a barrel. Prices for West Texas Intermediate (WTI) also retreated by a little more than 1%, closing the day at $108.80.
Brent prices have climbed steadily following escalations across Egypt and the ousting of President Mohamed Morsi.
Meanwhile, in the United States, improved infrastructure and greater network access have fueled WTI prices to near par with Brent this month.
But Brent prices have spiked this week following news that the West may intervene in Syria, where a chemical attack was allegedly launched against civilians.
Despite warnings from Russia and China, it remains unclear whether the United States will intervene. However, any action is likely to set off a chain reaction across the Middle East and could affect trade within the region, especially on oil shipments.
Here are the details on how Syria affects oil prices, what that means for you – and how to profit.
Why Syria Matters to Oil Prices and Your Money
The situation in Syria is distinctly different from previous conflicts and unrest in the Middle East. That's because Syria is a very small producer of crude.
In fact, the country's exports have been heavily restricted by the U.S. and European Union sanctions, and its infrastructure has been crippled due to civil conflicts across the country.
Today, Syria's oil output is less than 100,000 barrels a day, a steep drop from the 400,000-barrel output it offered two years ago before its civil war began.
But Syria's importance to the global trade falls under two areas…
First is its religious culture. Potential war would likely aggravate tensions in oil-producing nations with large Shiite populations. This includes nearby Saudi Arabia, Kuwait, and even Nigeria thousands of miles away.
Second, Syria's proximity to vital pipelines and sea routes used in the global crude trade is cause for concern.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.