NEW YORK: Global oil prices tumbled Monday after a US-Russia deal over the weekend to dismantle Syria’s chemical weapons, easing crude supply fears.
The main US futures contract, West Texas Intermediate for October delivery, closed at $106.59 a barrel on the New York Mercantile Exchange, down $1.62 from Friday’s settlement.
Brent North Sea crude for delivery in November, the European benchmark, dropped $1.63 to close at $110.07 a barrel in London trade.
The sell-off came after the United States and Russia on Saturday struck a deal to dismantle Syria’s chemical weapons by mid-2014.
US Secretary of State John Kerry and his Russian counterpart Sergei Lavrov, after three days of talks in Geneva, reached an agreement giving Syrian President Bashar al-Assad’s regime a week to hand over details of the quantity and location of all its chemical weapons.
The stockpile would then be turned over to international supervision and destroyed by mid-2014.
“Petroleum prices came under renewed selling pressure in Monday trade after the US and Russia reached an agreement over the weekend to work through the UN Security Council on a resolution pressuring Syria to give up its chemical weapons,” said Timothy Evans of Citi Futures.
“The path forward on Syria may not be smooth, and we note the Syrian opposition’s disappointment with the deal, but the odds that a military strike can be avoided have certainly improved in recent days.”
The deal has won backing from China, a veto-wielding permanent member of the UN Security Council.
Analysts said the accord had averted a possible US-led strike on Syria in retaliation for its alleged use of chemical weapons against its own people.
Oil futures last month hit multi-month highs on fears that the US would press ahead with a punitive military strike on Syria, in a move which could spark a wider conflict in the crude-rich Middle East.
Traders also awaited the outcome Wednesday of the Federal Reserve monetary policy meeting.
The policymakers are widely expected to announce the start of a pull-back of the central bank’s massive asset-purchase program, known as quantitative easing (QE).
“This Tuesday and Wednesday will provide us with vital clues as to when, and by how much, the Fed might reduce its $85-billion (monthly) asset-purchase program,” said Tamas Varga, analyst at oil brokers PVM.
“Barring any other significant developments this will set the direction for the oil and stock markets for the coming week.” (AFP)