Brent crude futures rose towards $113 a barrel today after two days of losses, with supply fears due to escalating tensions in the Middle East prevailing over a sluggish outlook for global demand.
Turkish president Abdullah Gul said yesterday that the worst case scenarios between his country and Syria are now playing out, fuelling concerns that the 18-month old conflict in Syria may spread to other countries in the region.
"Right now the market is concerned about the continuing conflict between Syria and Turkey, and the worry is that if it escalates, it may disrupt supplies," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.
Front-month Brent futures had risen 89 cents to $112.71 per barrel this morning.
US crude gained 85 cents to $90.18, also rebounding after two consecutive sessions of declines.
Tensions between Syria and Turkey are at their worst since March after cross-border firing accidentally killed some Turkish civilians last week, causing Istanbul to boost its military presence along the Syrian border.
This could threaten oil production in the north of Iraq and its transport to the West, analysts said.
Turkey's armed forces have been responding in kind to gunfire and shelling is spilling across from the south, where Syrian president Bashar al-Assad's forces have been battling rebels who control swathes of territory.
Concerns over the situation have eclipsed Iran's long-running row with the West over Tehran's disputed nuclear programme that has led to sanctions on Iranian oil shipments.
But a poor outlook for the global economy is keeping a lid on oil price gains.
Reuters
