The price of oil has continued to rise while stockmarkets fell in the UK and Europe as investors continued to fret over possible Western intervention in the Syrian conflict.
The US has said its forces are “ready to go” if evidence emerges that the Syrian government ordered an alleged chemical strike that is believed to be responsible for the deaths of hundreds of civilian on 21 August,while the UK plans to put a resolution to the UN Security Council “authorising all necessary measures to protect civilians” in Syria.
WTI Crude was up 0.79 per cent as of 1630 BST today to reach $109.87 a barrel after investors weighed up the potential impact of fresh conflict in the region. Earlier in the session, Brent crude oil hit a six-month high above $117 a barrel although the price has since fallen back.
Capital Economics chief global economist Julian Jessop says: “Global markets are understandably worried by the prospect of US-led airstrikes on Syria, particularly given the renewed surge in oil prices.
“Whereas much of the rebound in the cost of oil since late June can be attributed to increased optimism about the world economy – reflected also in rising equity prices – the latest increases are clearly a negative.”
Europen stockmarkets fell over the session, with FTSE 100 losing 0.17 per cent to reach 6,430.06 points and the Euro Stoxx 50 dropping 0.24 per cent to 2,742.64. The French Cac 40 and the German Dax were also down over the day.
Airlines suffered as investors mulled the effect of higher oil prices on their earnings. British Airways owner International Airlines Group was the biggest faller of the session, dropping 4.5 per cent to 287p.
Charles Stanley Direct investment director Douglas McNeill says: “It’s an ill wind that blows no good, of course, and whilst airlines quail at the thought of dearer oil, the oil & gas sector rubbed its hands and added 2 per cent.
“Overall, though, the FTSE 100 has lost about a quarter of 1 per cent today and is hovering only a little above the 6400 level that it broke up through in early July.”