For a country that produces, transits and consumes little oil, Syrian news can certainly move markets.
Brent crude prices finished 1.3 per cent up on Friday after the US missile strikes against an airbase used by the regime of Bashar Al Assad to launch chemical weapons attacks. In the Syrian cauldron, this knee-jerk reaction may, nevertheless, not be wholly unfounded.
The US action might, as often before, prove to be a limited tactical action for demonstration purposes, helping the US president, Donald Trump, in his domestic troubles. Without any wider military or diplomatic strategy, it will resolve nothing in Syria’s civil war.
However, if it does lead to an escalating campaign against Mr Al Assad, this will further implicate three major oil players; Iran, Iraq and Russia.
Events in Syria affect Iran, and vice versa. A heightened confrontation in Syria may convince Iranian hardliners that they cannot afford another term for the moderate president Hassan Rouhani, who is up for re-election on May 19. They are already unhappy over Mr Rouhani’s attempts to reduce the influence of Revolutionary Guards-linked companies over the oil sector and cut them out of business deals.
For once, the conservatives appear to be aligning around a single candidate, Ebrahim Raisi, who is also a front-runner to become the supreme leader when Ayatollah Khamenei passes on.
The Rouhani administration has been open to negotiations over Syria that preserve Iran’s national interests while possibly sacrificing Mr Al Assad, but the hardliners have tied their policy to the survival of the Syrian dictator.
What that means for the nuclear deal that has restored Iran’s oil exports is hard to say. For now, its continuation probably depends more on US actions, including the upcoming renewal of sanctions waivers. It has not delivered the economic bonanza Iran had hoped for, but Mr Rouhani has probably done enough to win re-election – if the contest is fair.
Iraq, as so often, is largely a pawn. A strengthening of Russian air defences over Syria will hamper the US-led campaign against ISIL, also prolonging the recovery of Iraq’s north. More seriously, if the embargo on its oil were to resume, Iran has several options to retaliate by disrupting Iraqi oil.
Neither Iran nor Russia will do anything to affect their own oil exports in response to the US action. The dynamics of renewing the Opec/non-Opec production cuts are largely independent of Syria. But a wider military campaign may well end up killing Russians on the ground. A less cosy relationship between Moscow and Mr Trump would keep sanctions on the Russian oil industry in place. Its reach in the Middle East has grown longer, in recent deals with the Kurdish region, Libya, Qatar and Egypt.
The market is well placed to cope with a mini-crisis. Global excess oil stocks may have fallen but remain unusually high. The Opec limits have taken some supply off the counter, but that has the corresponding effect of creating spare capacity, available in an emergency. US shale has already been rebounding for several months in response to the Opec deal.
A major shock, such as the disruption of the 3.5 million barrels that leave Basra every day, would be harder to accommodate. To eliminate its dependence on shipping through the Strait of Hormuz, Saudi Arabia is expanding its east-west pipeline to 7 million barrels per day from its current 5 million bpd, but this will not be ready until late next year.
A few pinprick air strikes do not change much in oil – yet. Indeed, crude gave up most of its gains on Friday. But when an understaffed, conflicted and incoherent administration, resolved to talk and act tough, steps up its involvement in a multi-sided civil war against two petroleum powers, a 70-cent jump in oil prices is not an overreaction.
Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis.
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