Brent crude is likely to see levels as high as USD 125 per barrel in anticipation or an actual US attack on Syria, believes Mike Wittner, head of global oil and commodities research- Societe Generale.
Speaking to CNBC-TV18, Wittner says the likelihood of a US-led attack on Syria owing to its alleged usage of chemical weapons is extremely high and now it is more a question of when and in what form the attack will take place.
However, Syria is not one of Wittner’s main concerns as it is not an important oil producer or exporter. The possibility of tensions in the area spilling over to vital oil exporters like Iran and Iraq is one that is discomforting most oil traders.
"In terms of oil, in the last two-three months, the northern pipeline which carries Iraqi crude to Turkey on the Mediterranean Sea, this pipeline normally transports 200-400 kbd (200,000-400,000 barrels per day) of crude and it has been attacked repeatedly. Average exports are now at 200 kbd. What really worries me in Iraq is if the violence escalates and somehow affects exports of the south, because in the North exports are at normal export levels of 400 kbd, Iraq exports two million barrels a day into Persian Gulf," he says.
Wittner fears a spillover of conflict to Iraq that also has a history of Shia-Sunni aggression, may make crude rally as high as USD 150 per barrel. "This is not a base case, but it is not negligible either. There’s a 20 percent chance of Brent seeing USD 150," adds Wittner.