Oil prices are little changed so far today with U.S. benchmark West Texas Intermediate off 0.04% to $71.11 a barrel as of noon New York time and international benchmark Brent down 0.06% to $77.16 a barrel.
The exchange of rockets and bombs between Iranian forces in Syria and Israeli units in the Golan Heights certainly ratcheted up fear of spreading conflict in the Middle East. That would ordinarily have been enough to send oil prices higher on the day–even after the recent strong move upwards in oil.
But markets are looking for some clarification on production plans from Saudi Arabia after the Saudi oil ministry said it will “mitigate the effects of any supply shortages” resulting from the re-imposition of U.S. sanctions on Iran. Markets know that the Saudis could pump more oil, but they know the country was very recently looking for oil prices to climb to $80 a barrel in advance of the potential IPO of Saudi Aramco, the state-owned oil company, next year.
It’s likely that the Saudis want to keep the market from panicking over supply shortages–which could create a damagingly unsustainable short-term spike–and yet to keep the market enough on edge to move prices gradually higher.
That’s a tough line to walk, of course.