Oil prices at nine-month high amid Mideast tension

WTI crude prices reached a new nine-month high level during the late European session on concern that unrest in Syria will spread to neighbor oil producing countries. Also, oil was supported by a halt in production at the Oseberg Field Center in the North Sea due to gas alarm and Morgan Stanley said today that South Korea increased oil buying.

On the New York Mercantile Exchange, WTI crude for August delivery traded at $98.37 a barrel, marking a 0.31% daily gain. Earlier prices reached a nine-month high of $98.94, while days low was at $97.62 a barrel.

Brent oil also rose on the day, marking a 0.25% gain. The European benchmark traded at $106.23 a barrel at 13:48 GMT, ranging between daily high and low at $106.66 and $105.42 per barrel respectively.

Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said for Bloomberg: “We’ve seen prices rising over the past week primarily over geopolitical worries. We are settling in for a range-bound day of trading and any major moves will have to be geopolitical related.”

Apart from U.S. president, Barack Obama, authorizing lethal weapon shipments to arm Syria rebels, U.K. government is also planning to give Syrian opposition non-lethal support.

Carsten Fritsch, Commerzbank senior oil analyst, said for Reuters: “Oil is currently being driven primarily by geopolitics. The decision of the United States to supply arms to the rebels in Syria threatens finally to turn the civil war in Syria into a proxy war between the world powers, given that Russia is providing military support to the Assad regime.”

Meanwhile, oil investors are also keeping a close eye on this weeks FOCM meeting and Ben Bernankes statement on the Quantitatve Easings future direction. Ric Spooner, chief market analyst at CMC Markets, said for Reuters: “The retreat in the U.S. dollar leading into the Fed meeting has given oil traders some impetus to push through resistance levels. As you can clearly see fundamentals are not supportive of the jump on Friday, the market will now need to see a catalyst like a supply disruption as a result of Middle East tensions, or a further weakening of the dollar for whatever reason.”

Meanwhile, oil prices were also limited after moderate cleric Hasan Rowhani won the presidential elections in Iran on Friday. He is seen as the least offensive and open to new conversation with the U.S. regarding the country’s nuclear program and the sanctions laid upon Iran.

Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management said for Bloomberg: “The market is responding to the news that the U.S. is going to arm the Syrian opposition. The Iranian elections are calming the geopolitical tensions.”