Ejiofor Alike with agency report
The price of crude oil Wednesday rose to $72 per barrel, its highest in more than three years, after Saudi Arabia said it intercepted missiles over Riyadh, worsening tensions in the Middle East.
Also comments by the U.S. President Donald Trump, who Wednesday warned Russia that missiles â€œwill be coming,â€ in Syria after a suspected chemical attack, also affected the global oil market.
Reuters reported that the fallout from new U.S. sanctions on Moscow have rattled investors and fears of military action were stoked after one of Russiaâ€™s ambassadors reiterated it would shoot down any U.S. missiles fired at Syria.
Trump, who has criticised Russia for standing by Syrian President Bashar al-Assad, shot back in a message on Twitter early Wednesday.
â€œRussia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and â€˜smart!â€™,â€ he wrote in the post. â€œYou shouldnâ€™t be partners with a Gas Killing Animal who kills his people and enjoys it!â€ he added.
With the markets reacting, oil prices rose to their highest in more than three years after Trumpâ€™s latest comments.
U.S. West Texas Intermediate (WTI) crude rose 2.43 per cent to $67.10 per barrel while Brent closed at $72.50, up 2.06 per cent on the day.
Crude oil prices began to climb on Trumpâ€™s warning over Syria, then rallied further on a report that Saudi Arabiaâ€™s air defence forces intercepted a missile over the capital Riyadh.
The prices last Friday suffered their worst weekly decline in two months after they followed plummeting equity markets amid growing fears of a trade war between the U.S. and China, the worldâ€™s two largest economies.
But on Monday, oil tracked global stock prices higher on signs over the weekend that the Trump administration might be softening its stance in the trade spat with China.
However, remarks from Chinaâ€™s foreign ministry and a tweet from Trump have suggested that the dispute could easily heat up again.
Oil prices on Tuesday hit over $70 as the trade war between the U.S. and China appeared to ease.
The price had on January 25, 2018 hit $71, its highest since December 2014.
After falling from an all-time high of $147 per barrel in July 2008, Brent crude price had hit a peak of $115 per barrel in June 2014 before excess inventory in the oil market forced the price down to $27 per barrel in February 2016.
WTI also reached a peak of $105 per barrel in June 2014 before the sharp drop in oil prices.
However, a production cuts pact between the OPEC, Russia and other producers has given strong tailwind to oil prices.
OPECâ€™s main objective for the cuts is to eliminate a global surplus in oil stocks and rebalance the market.
OPEC, together with Russia and a group of other producers, last November extended the output cuts to cover all of 2018.
The current deal, under which OPEC and non-OPEC producers are cutting supply by about 1.8 million barrels per day, expires in March 2018.
OPEC is cutting output by even more than it promised and the restraint is reducing oil stocks globally, a trend most visible in the U.S., the worldâ€™s largest and most transparent oil market.