Syria crisis: Spike in crude knee-jerk reaction, says pro

Jonathan Barratt, BarrattsBulletin.com is of the opinion that on any acceleration of an aggression in Syria could lead to crude oil prices spiking up as a knee-jerk reaction but later could come back below the recent highs.

Due to tensions escalating in Syria the Brent crude was trading around USD 115 per barrel. However, Barratt feels although Syria does not produce oil there could be a contagion risk for the entire region. Also read: Russia says ballistic 'objects' fired in Mediterranean Below is the verbatim transcript his interview on CNBC-TV18 Q: How have you read the recent news flow and the escalation of the geopolitical worries? Do you think Brent crude can now go towards USD 118-120? A: There are few interesting developments there. At the end of the day any conflict there will have a knee-jerk reaction and that knee-jerk reaction will probably be sold into. As we know Syria does not really produce oil, but the risk is contagion for the entire region. So similar to other occurrences in the past like the Gulf War, we saw crude oil had a quick run to the topside, but once we realised the conflict was not sustainable then prices came off quite dramatically. Therefore, we could see an initial spike to the topside on any acceleration of an aggression, but outside that you will find that it will probably come back below the recent highs. Q: What are you picking up on the current situation and what exactly is happening at the moment, because we are getting some news that a Syrian gas pipeline has burst and Russian defense ministry has detected two ballistic objects fired as well. Sitting in Sydney what are you picking up at this point? A: Similar stories. I guess a lot of it is a little bit too sketchy to really be clear on what is happening. In terms of the gas pipeline, I guess we are looking for a little bit more clarity on who, what and how. I think at the moment it seems to be more talk than actual action. Remember that they have got a lot of work that needs to be done in the US Congress before anything happens from the US side. I think there is a skirmish occurring but how much do I read into it - I really need to see a little bit more evidence of what is really happening.