Brent crude oil dropped below $ 116 a barrel on Thursday as the possibility of a delay in a U.S.-led military strike on Syria helped calm concerns over Middle East oil supplies.
The West has been gearing up for an attack in response to last week’s chemical weapons attack, although U.S. President Barack Obama faced new obstacles with British allies and U.S. lawmakers that could delay any imminent action.
Brent crude for October delivery hit a low of $ 114.94 a barrel, before recovering to trade around $ 116. It jumped over 5 percent in the previous two sessions, posting its strongest two-day gain since January 2012.
October U.S. crude fell $ 1 to around $ 109, following a near 4 percent gain over the past two days.
Oil has jumped this week to multi-month highs on fears that the potential strike on Syria could spread unrest to major oil producers in the Middle East and disrupt supply. Even without disruption to supplies from key oil producers such as Saudi Arabia and Iraq, the oil market already has a host of supply issues to worry about.
Analysts say between 2 million and 3 million bpd of oil has been removed over the last few months, tightening a market that otherwise would have been well supplied. U.S. energy consultancy PIRA said on Thursday Saudi Arabia is set to make up for the shortfall, pumping 10.5 million bpd of crude on average throughout the third quarter, 1 million bpd above the second quarter and its highest quarterly level of production ever.
For more information on commodities prices, please click here.