LONDON Aug 28 Brent crude oil is likely to rise
towards $125 a barrel if the West launches air strikes against
Syria and could go even higher if the conflict spills over into
the rest of the Middle East, Societe Generale said on Wednesday.
Michael Wittner, oil analyst at the French bank, said the
North Sea crude oil benchmark could surge as high as
$150 per barrel if the war affects key oil producers such as
Iraq, although any jump in prices would probably be brief.
"We believe that in the coming days, Brent could gain
another $5-10, surging to $120-$125, either in anticipation of
the attack or in reaction to the headlines that an attack had
started," Wittner said in a note to clients.
"If the regional spill-over results in a significant supply
disruption in Iraq or elsewhere, Brent could spike briefly to
$150," he added.
"In our base case, we assume an attack begins in the next
week. If it takes longer, and there are no signals that an
attack is imminent, the oil price uplift from the entire Syrian
situation will start to fade."
Brent crude oil futures for October hit a six-month high of
$117.34 on Wednesday on fears that a regional conflict could
affect supplies at a time of restricted output from other oil
producers in the Middle East and North Africa.
Wittner said if oil supplies were curtailed by a military
conflict the oil market would rely on extra output from Saudi
Arabia, the only member of the Organization of the Petroleum
Exporting Countries with sufficient spare oil production
"The Saudis could handle most likely scenarios, but the
markets will look at the shrinking spare capacity that remains
after any disruption is made up, and that would be bullish."
Wittner said oil consumer countries might consider releasing
part of their considerable strategic oil reserves if oil prices
rose too high or supply shortages became acute.
(Reporting by Christopher Johnson; Editing by David Cowell)