Geopolitical risk sends oil prices to 3-year high

Geopolitical tension including the prospect of U.S. strikes against Syria helped to send crude oil prices to their highest levels in over three years during trading yesterday.

What they're saying: In a note Thursday, a Barclays analyst predicted that geopolitical events could keep Brent prices above $70 over the next couple of months, though they see a downward trend in the second half of the year. "Over the near term, however, prices continue to benefit from a perfect storm of stagnant supply, geopolitical risk, and a harsh winter," Michael Cohen writes.

One level deeper: Flashpoints and events affecting the market included President Trump's tweeted warning Russia that missiles "will be coming" in Syria in response to the apparent chemical attack, and reports that Yemen's Houthi rebels fired more missiles into Saudi Arabia.

What might be next: In a note late last night, RBC Capital Markets analysts raised the prospect of the Syrian conflict spreading beyond the country's borders, and also said the conflict in Yemen "presents a clear risk to regional energy supplies given attempted attacks on Saudi targets."

• "Both situations present clear risks and may add a ‘fear premium’ or even put physical barrels at risk in the case of Yemen," they write, reiterating that the U.S. is likely to end waivers of Iran sanctions next month and ultimately abandon the nuclear deal.

Where things stand this morning: Per MarketWatch, "oil futures wavered Thursday, holding near three-year highs as investors kept a nervous watch on Middle Eastern events."