Oil jumped as the US cruise missile attack against Syria roiled global financial markets.
Futures in New York and London surged more than 2 percent, hitting the highest in a month. The strike early Friday targeted hangars, planes and fuel tanks at one Syrian military airfield, a U.S. official said. Syria borders Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries. The news rippled across financial markets, with the yen and gold rising as stocks fell.
"Syria is not a big oil producer but it does potentially increase the risk of escalation in the whole region," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"We're seeing a risk response to the airstrike. Given rising supply, the size of inventories and the extent of the pick up in shale output, it does seem likely that price gains will be capped," Spooner said.
"Oil has struggled to extend a rally beyond $51 a barrel in the past week as concerns over surging US supplies countered optimism OPEC's production cuts will ease a global glut.
"The strike against Syria comes two days after Bashar al-Assad's regime used poison gas to kill scores of civilians, drawing international condemnation while U.S. President Donald Trump called it "an affront to humanity."
West Texas Intermediate for May delivery on the New York Mercantile Exchange rose as much as $1.24 to $52.94 a barrel, the highest level since March 7, and traded at $52.47 by 12:22 p.m. in Hong Kong. The contract advanced 55 cents to $51.70 on Thursday. Prices are up 4.1 percent this week, heading for a second weekly gain.
Brent for June settlement on the London-based ICE Futures Europe exchange surged as much as $1.19 to $56.08 a barrel, also the highest level since March 7. Prices are up 5.6 percent this week. The global benchmark crude traded at a premium of $2.73 to June WTI.
Gold also rallied on haven demand as US missiles hit Syrian targets
The oil price spike may be temporary as long as the military action is contained and doesn't spread into Iraq, as Syria is no longer a significant producer, Nomura Holdings Inc. said in a note.
Iraq pumped 4.43 million barrels a day last month, according to data compiled by Bloomberg.
Syrian output has slumped during ongoing internal conflict, falling to about 35,000 barrels a day of oil and some other petroleum liquids in 2016, making it the 66th-biggest producer, according to the Energy Information Administration.
The country's oil production averaged 400,000 barrels a day between 2008 and 2010.