Oil prices spurt as tensions in Saudi-Syria, US-Russia relations rise

Crude oil markets have been heating up and this has reflected in fuel prices in India with petrol touching 4-year highs and diesel also at all-time highs.

Oil had already started off Tuesday with big gains as the United States closed in on a decision on whether to launch a strike on Syria in response to an alleged gas attack.

OPEC is cutting output by even more than it promised and the restraint is reducing oil stocks globally, a trend most visible in the US, the world's largest and most transparent oil market.

Watch Manisha Gupta share insights into crude demand-supply, and what will drive prices.

USA crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute (API) on Tuesday, compared with analysts' expectations for a decrease of 189,000 barrels.

While global oil prices stabilised on Friday, they continue to pose worries for governments and consumers around the world, with fears that they could touch the $80 a barrel mark in about a year.

Oil prices hit new 2018 highs as missile strikes on top crude exporter Saudi Arabia added to the market's worries about a potential conflict between the US and Russian Federation in Syria.

Prices were also impacted by reports that Saudi Arabia intercepted missiles over Riyadh fired by Yemeni Houthi rebels.

In China, Shanghai crude futures were also up, rising 8.9 yuan to 427.1 yuan ($68.03) per barrel, up 2.1 percent and with record volumes traded on the product that was only launched in late March.

"All eyes are on geopolitical tension at the moment, not just because the market is that much more finely balanced, but because there are several pockets of geopolitical tensions", he said.

The U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, to 11.44 million bpd.

"Shale producers can't raise production quickly and the Gulf of Mexico is already exceeding expectations and that is why oil is acting so strong, even though it is unclear that an attack on Syria will disrupt any supply of oil at all", Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in market commentary emailed to UPI.

The morning price spike was completely due to the Trump tweet, which left the market to figure out the President's meaning, according to Kilduff.

At the time of writing, Brent crude oil futures were up 0.17 per cent at $72.18 per barrel, having hit $72.49 earlier in the day. The Organization of Petroleum Exporting Countries, meanwhile, reported that total member state output declined by an average 200,000 barrels per day last month.

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