Oil prices climbed this week on the heels of last Fridays terrorist attacks in Paris. “Friday’s dreadful events and their aftershocks all threaten economic growth; hence the market is coming lower,” PVM Oil Associates analyst Tamas Varga said.
Both crude benchmarks saw high levels of activity in early trading, according to Reuters data. Front-month U.S. crude futures were trading at $41.63 a barrel, up 88 cents for this weeks session. Brent was trading at $45.03 a barrel, up 57 cents from earlier this week.
Airlines could suffer the worst due to less tourism and travel within Europe. Airlines and tourism company stocks dropped in European markets this week. Air France-KLM shares were down 5.6 percent.
“Because both crude oil and combined crude, and product stocks are near record levels are reasons for concern,” Barclays bank said in a research note.
Oil prices typically escalate on concerns of supply disruptions caused by military conflict. The U.S. and France are expected to strengthen efforts against the Islamic State in Iraq and Syria (ISIS). France released airstrikes against ISIS on Sunday.
Some experts believe that the recent attacks are not as influential to oil prices as anticipated. Johannes Benigni, founder and chairman of JBC Asia, said it was unlikely that the Paris terror attacks would impact the price of oil.
“In the bigger scheme of things, in the oil market that’s not really an issue,” said Benigni. “Fundamentally prices are not looking too great right now.”
Certain oil fields in the Middle East are reported to be operated by ISIS with profits funding its campaign. Benigni said that ISIS might be selling up to 20,000 barrels of oil a day but said that it would be “highly overestimated” to suggest that increased attacks against the terror group could affect global oil benchmarks.
It is hard to determine how these events can really impact oil prices in the long term said Michael Scialla, a research analyst for the investment banking firm Stifel.
Article written by HEI contributor Aliyah Cole.