Uncertainty about the possibility of military action against the Syrian government lifted oil prices toward a five-month high on Tuesday.
Brent crude rose above US$111 a barrel on Tuesday to trade near its highest in five months as rising tensions over a suspected chemical weapons attack in Syria raised the prospect of more military action in the Middle East.
The United States and its allies have met in Jordan for what could be a council of war, should they decide to punish Syrian President Bashar al-Assad, who has denied using chemical weapons and blamed rebels for staging such attacks.
Brent crude for October was at $111.18, up 45 cents by 03:07 GMT, after settling down 0.3 percent in the previous session. Brent hit $111.68 on Monday, its highest since Apr. 2.
US crude for October delivery rose 53 cents to $106.45 a barrel, after falling 0.5 percent the previous day as data showed US durable goods orders had dropped the most in nearly a year.
“Any dips in oil prices will be well supported by tensions bubbling in Syria as that has the potential to spread into other parts of the region,” Ben Le Brun, a market analyst at OptionsXpress in Sydney said.
Unrest in the Middle East has supported Brent crude as investors feared that the crises in Syria and Egypt could spill over to the rest of the region and disrupt oil supply.
The US put Syria’s Assad on notice on Monday that it believes he was responsible for using chemical weapons against civilians last week in what Secretary of State John Kerry called a “moral obscenity”.
In Libya, one of its ports, Marsa al-Brega, has resumed crude loadings after workers’ protests reduced exports from the OPEC producer to the lowest since its civil war in 2011.
Libya’s largest port Es Sider remained shut. The country warned on Monday that it would attack and destroy any tanker illegally exporting oil. Its armed forces last week fired at a Liberian-flagged tanker close to Es Sider port.
In the US, weak data on home sales and durable goods orders tempered views that the Federal Reserve could start paring back the stimulus as soon as September.
“We’ve probably been putting the cart before the horse,” Le Brun said. “If the tapering is pushed back later into 2013, that should be supportive of risk assets such as gold and oil.”
The American Petroleum Institute will release later on Tuesday weekly oil stocks data.
A preliminary Reuters poll showed that US commercial crude stockpiles were expected to have fallen last week as refinery utilization rates were at high levels, and gasoline inventories likely dipped primarily due to seasonal factors.