Oil Prices Jump on Syrian Development, Chinese Monetary Policy Move

During the session, Brent crude futures appreciated by $1.02 or 1.4 per cent to finish at $72.14 per barrel and the US West Texas Intermediate (WTI) crude futures went up by $1.17 or 1.7 per cent to quote at $68.37 per barrel.

The rebel-led Salvation Government rebels seized the Syrian capital of Damascus and President Assad fled to Russia over the weekend ending a 50-year rule of the Assad family in the Middle East country.

The Prime Minister of the country, Mr Mohammed Jalali, agreed to hand power to the main rebel commander, Mr Ahmed al-Sharaa, better known as Abu Mohammed al-Golani, who met overnight with Mr Jalali and Vice President Faisal Mekdad to discuss a transitional government.

Market analysts noted that this could impact the crude market and increase the geopolitical risk premium on oil prices in the weeks and months to come amid yet more instability in the Middle East region.

The imminent transfer of power follows 13 years of civil war and the end to more than 50 years of brutal rule by the Assad family, leaving Syrians at home and millions of refugees abroad hopeful yet deeply uncertain about their country’s future.

Although Syria is not a major oil producer, it holds geopolitical clout due to its location and ties with top oil producers-  Russia and Iran.

Reuters reported that a tanker carrying Iranian oil to Syria turned around in the Red Sea.

Meanwhile, China will adopt an “appropriately loose” monetary policy next year, the first easing of its stance in 14 years.

China’s economy has struggled this year which has affected oil demand.

This development has prompted policymakers to act with the central bank unveiling its most aggressive monetary easing since the pandemic in September.

The world’s largest oil producer also cut interest rates and injected 1 trillion Yuan ($140 billion) into the financial system, among other steps.

The country is also preparing for the return of US President-elect Donald Trump to the White House in January, after threatening tariffs of 60 per cent or more on Chinese imports.

Traders also remained focused on US inflation data expected later this week that could make a case for a December interest-rate cut by the Federal Reserve next week.

Lower interest rates decrease the cost of borrowing, which can boost economic activity and spur oil demand.