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Strike on Syria would cause oil prices to ... drop?

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Hasan Jamali/AP

(Read caption) Oil pumps work Wednesday in the desert oil fields of Sakhir, Bahrain. Oil prices have historically rallied in anticipation of major global security events.

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Over the last month, oil prices have been steadily climbing due to an assortment of factors. The oil crisis in Libya, production problems in Nigeria, and low OPEC spare capacity have all served to tighten the oil market. Exacerbating this is the looming threat of Syria, where the prevailing opinion is that any American intervention will send the price of crude oil skyward. Estimates as to how high said price spike will be and how long it will last vary considerably, but most agree that military action will be generally inflationary. 
    
However, some claim that the opposite will happen. Carley Garner, co-founder of DeCarley Trading and author of A Trader’s First Book on Commodities, claims that the oil market might tumble following an American strike in Syria. A Morgan Stanley note this week echoed the sentiment, stating that “the higher the run-up prior to the event, the greater the post-event decline … we would be sellers on any upward price action on military intervention in Syria.”

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