Oil prices climbed to one-month highs on Friday while investors flocked to safe-haven assets, after the US launched a missile strike on an airbase in Syria in response to recent chemical weapon attacks.
According to Reuters, US President Donald Trump said the strike was in the US's "national security interest".
On the news, the price of Brent Crude spiked above $56 a barrel but has now fallen back, rising 1.42% to $55.67, while West Texan Intermediate climbed 1.61% to $52.53, both one-month highs.
While Syria's oil production remains limited, its location and alliances with big oil producers have raised concerns about an escalation of the conflict disrupting crude shipments.
Officials said the US did inform Russia about the airstrikes, which were targeted on sections of the Syrian base where Russian forces were not located, according to Reuters.
Jeffrey Halley, senior market analyst at Oanda, told Reuters: "The US cruise missile strikes have seen crude oil jump over 2% in a straight line.
"What will be the response of Iran and Russia, two of the world's largest oil producers and staunch allies of the Assad regime? ... We will have to wait for these answers as the day moves on."
Meanwhile, the airstrikes prompted investors to seek out safe-haven assets. Gold gained as much as 1.4% to $1,269 per ounce, according to the BBC, while the Japanese yen and government bonds also benefitted.
The yen was 0.3% stronger at ¥110.51 per dollar, having initially climbed as much as 0.6%, according to the Financial Times, while the yield on benchmark 10-year US treasuries fell 2.9 basis points to a four-month low of 2.3122%.
Oil prices have been range-bound in the last few months at $50-$55 a barrel despite the Organisation of the Petroleum Exporting Countries (OPEC) signing an agreement with non-OPEC members to cut production by 1.8m barrels a day, as US shale production has scuppered the cartel's plan of a return to higher oil prices.
According to Nitesh Shah, commodities strategist at ETF Securities, the number of rig counts online have risen 85% since the low reached in May 2016, while production is almost back to the levels before OPEC decided to flood the market.
He said: "As oil prices have stabilised in the $50-$55 a barrel region since December 2016, oil production in the US has surged. Production in the US is now only 7% below the peak reached in June 2015, after production surged since October 2016. US crude oil inventory is only 1% below its all-time high."
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