Oil backtracks as Syria strike may be averted

Saving Face

In what is almost a miraculous turn of events, an off-the-cuff comment by Secretary of State John Kerry may provide a way out of war for the United States. When asked if there was a way for Syria to avoid a military strike John Kerry said in effect that if Syria gave up its chemical weapons within a week then a strike could be avoided. Then he seemed to give that look like, right, like that is going to happen.

But Russia latched onto the comment.  Russian Foreign Minister Sergei Lavrov made a proposal and said that "We are calling on the Syrian leadership not just to agree to put chemical-weapons stores under international control, but also to their subsequent destruction, as well as fully fledged accession to the Chemical Weapons Convention."  At first then the State Department said we weren’t serious about that, but on second thought if the Syrians agree this might be a face-saving way for the United States to get out of the box that we were painted in. The Syrian government said it welcomed the proposal by Russia to avoid a U.S. military strike and they would be happy to put the international community in control of the chemical weapons that they denied they had in the first place.

The White House seemed to breathe a sigh of relief and said they would take a hard look at the proposal. President Obama invoked Ronald Reagan by saying trust but verify.  He also said that the Syrians would have never offered to give up their weapons if it were not for the threat of force.

So if war is avoided, who will get the credit? Secretary of State John Kerry?  Will the Russians be seen as peacemakers?  Will President Obama get the credit for his pressure on the regime? Or maybe it should be Pope Francis for his prayer vigil, because let's face it, this is a miraculous turn of events.

It sure turned oil lower. Most of the impact was seen in Europe, not only in the Brent crude but a sharp reversal in the gas oil. Fears were building that supply of gas-oil would tighten with a conflict as we headed into winter, but now that risk has diminished. Oil prices are down even as global stock markets soar, not only on strong global economic data but relief that war could disrupt the global economic recovery. Still there are worries about Libyan supply but now with the risk of war lessened perhaps the markets will worry less.

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