New uncertainty in the Middle East after the fall of the Assad regime causes oil prices to rise – Commerzbank

Oil prices rose significantly at the start of the week, making up for Friday's losses, Commerzbank’s commodity analyst Carsten Fritsch notes.

A higher risk premium on the oil price seems justified

“Prices were driven up by news from China, which led to a brightening of demand prospects. In addition, there is new uncertainty in the Middle East after the Assad regime in Syria, which has been ruling for decades, was toppled at the weekend and it is still unclear who will fill the resulting power vacuum.”

“This obviously also brings back memories of the fall of the long-term rulers in Iraq in 2003 and Libya in 2011, whereupon both countries plunged into chaos. In contrast to these two countries, Syria is not a significant oil producer, but due to its geographical location in the Middle East it is of great importance for the stability of the region.”

“A higher risk premium on the oil price is therefore justified. On a positive note, Iran could lose influence in the region due to the loss of its ally Assad.”