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Oil drops as Syria risk seen muted after weekend air strikes

Reuters  |  NEW YORK 

By Jessica Resnick-Ault

NEW YORK (Reuters) - prices dropped on Monday as investor concern waned about escalating tensions in the following air strikes on over the weekend.

The United States, and Britain launched 105 missiles on Saturday, targeting what they said were three in in retaliation for a on April 7.

prices had risen nearly 10 percent in the run-up to the strikes, as investors bulked up on assets, such as gold or U.S. Treasuries, that can shield against geopolitical risks.

"Some of the ease in is the headline that is bringing it down," said Phil Streible, senior market at in Because the attacks were more surgical than anticipated in more extreme scenarios, the market has shrugged off bullish factors, he said.

"It has got everything to possibly boost it: weak dollar, Syria, potential sanctions, uncertainty, trade," he said.

Brent futures settled down $1.16 at $71.42, while U.S. crude futures were down $1.17 at $66.22 a barrel.

"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 diplomatically, or on the ground, following the intervention by the U.S., and the UK," said

"As a macro asset-allocator, if you want to hedge your portfolio against geopolitical risk, your prime candidate is oil, especially if that risk is in the "

Although Syria itself is not a significant oil producer, the wider is the world's most important crude exporter and tension in the region tends to put on edge.

"Investors continued to worry about the impact of a wider conflict in the Middle East," said.

Fund managers hold more Brent futures and options than at any time since records began in 2011, according to data from the

Investors have added to their bullish positions in Brent, which now equal nearly 640 million barrels of oil, in nine out of the last 10 months.

The next event on investors' radar is potential U.S. withdrawal from a deal on Iran's nuclear restrictions, signed in 2015. U.S. has threatened to withdraw the from the pact, barring action from and

Even the imposition of unilateral sanctions by the could hamper exports of oil from Iran, one of the world's largest producers.

"Oil is still holding relatively well and the mid-May Iranian deadline is going to be a bit of a subject for the next four weeks," said.

(Additional reporting by and in Singapore and Amanda Cooper in London; Editing by and Matthew Lewis)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 17 2018. 01:50 IST