Oil surges after Turkey shoots down Russian jet

[NEW YORK] Global oil prices surged higher on Tuesday after Turkey shot down a Russian warplane on the Syrian border, sparking concerns about rising in the oil-rich Middle East.

US benchmark West Texas Intermediate for January delivery gained US$1.12 to US$42.87 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for January delivery advanced US$1.29 to US$46.12 a barrel in London.

The Turkish army said the plane was shot down by two Turkish F-16s after it had violated Turkish airspace 10 times within a five-minute period. Russia insisted the plane was inside Syrian airspace, raising the possibility of a major spike in tensions over Syria.

"We're really getting a boost here from geopolitical tensions, as concerns have been stoked by news a Russian plane has been shot down, and fears that an escalation could cause some kind of contagion in the Middle East and ultimately affect oil supplies," said Matt Smith, an oil analyst at ClipperData.

Still, market analysts noted that Syria produces almost no oil and that there was a good chance that the uptick in tensions over the incident could abate before long. As a result, some viewed Tuesday's jump in oil prices as evidence of profit taking.

The market is looking ahead to Wednesday's weekly US oil inventory report. Analysts said the impending Thanksgiving holiday in the US on Thursday could mute reaction to the government report, although there also was the chance of greater volatility due to low trading volume.

AFP