Oil prices fell drastically and the bonds of the government rose in yields on Monday. This change was marked due to the view of weekends of U.S.- led missile strikes on Syria which were unlikely to mark the start of a much greater conflict.
The strikes of Saturday marked the biggest intervention by Western countries against the president Syria, Bashar Al-Assad and his ally Russia, who is to face further economic sanctions over its role in the conflict.
On Saturday, The United States, France and Britain had launched105 missiles. As per the sources, these missiles were targeting on three chemical weapons in Syria in retaliation for a suspected poisoin gas attack on April 7.
The Oil Prices got arise of nearly 10 percent in the run-up to the strikes, just like investor got up on assets, such as gold or U.S. Treasuries, which have the capacity to shield against geopolitical risks.
On Monday, 16 April 2018 by 11.40, Brent Crude oil futures LCOc1 were down 83cents at $71.75 a barrel while U.S. crude futures CLc1 were down 78cents at $66.61 a barrel.
BNP Paribas global head of commodity market safety Harry Tchilinguirian said, “As far as developments in Syria are concerned, the market has had a sigh of relief in the sense that there is no escalation, either diplomatic or on the ground, following the interaction by the U.S. , France and the U.K.”
Although Syria is not a significant oil producer, the tension in the region of Middle East tends to put oil market on edge because the area of Middle East which is the main oil Producing area will also be affected by conflicts in Syria.
Investors are worrying about the impact of wider conflict in Middle East. Fund managers are grabbing on more Brent futures and options than any time since 2011, according to data form O-ICE.
Investors added to their bullish position, which is now nearly equal to 640 million barrels of oil in past 9 months.
Aside from the race of profit taking after the air strikes oil has come under some pressure from another rise in U.S. drilling activity. U.S. companies have added seven signs in the week up to April 13, bringing the total to 815. This total is highest since March 2015 said Baker Hughes on Friday.