Crude oil prices exploded to the highest price since 2014, gushing to $67.76 per barrel on Friday morning.
The primary fuel for this rally was the rising tension in the Middle East as President Donald Trump considers military intervention in Syria.
Trump has threatened Syrian dictator Bashar al-Assad in response to reports that Assad’s regime again used chemical weapons against civilians.
Assad is supported by Russia, which means that an attack against Syrian government troops could hit Russians as well, potentially resulting in an escalating military conflict.
Fears of a conflict spiraling out of control have traders on edge, especially since other major oil producers in the Middle East, including Saudi Arabia and Iran, have vested interests in Syria as well, making it a potential powder keg.
These fears are exacerbating an already tight crude oil market.
Globally, stockpiles of crude oil have been declining for the last two years after production cuts from major producers. In 2016, Russia and the Organization of Petroleum Exporting Countries (OPEC) agreed to reduce oil production to raise prices, a strategy that is finally paying dividends for oil producers as oil approaches $70 per barrel.
Farm Aid on the Way?
In the ongoing trade dispute with China, American farmers seem to be the most likely casualty, as China’s retaliatory tariffs have been aimed heavily toward U.S. exports of soybeans, pork and other agricultural products.
This initially prompted numerous farm groups to speak out against Trump’s recent trade actions against China, the second-largest buyer of U.S. farm goods. However, the president has pledged to shield American farmers from harm and is proposing to create an aid package that could support farmers reeling from the trade dispute.
Additionally, the Trump administration seems to be revisiting other trade deals like NAFTA and the Trans-Pacific Partnership (TPP) to boost agricultural exports to our non-Chinese trading partners.
Optimism about better trade prospects helped boost soybean prices to a five-week high on Friday morning near $10.67 per bushel.
Aside from trade, many Midwestern farmers are beginning to worry about the spring planting weather; cool, wet conditions could delay planting and reduce crop yields this year, a fear that is helping to boost soybean prices.