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Oil prices drop after air strikes in Syria

UNITED STATES (OBSERVATORY) –¬†Oil prices fell on Monday after two days of Western air strikes in Syria that did not cause the conflict to escalate as stocks tumbled.

On Saturday night, the United States, Britain and France launched strikes on military posts in Syria in response to a presumed chemical attack that accused the Russian-backed regime of President Bashar al-Assad of launching a raid on a town near Damascus.

“Although investors have gone beyond rocket strikes on Syria and are working on the grounds that there will be no escalation of the conflict or an adverse reaction to the market, stock markets are floundering,” said Rebecca O’Keefe, analyst at Interactives Investments.

But crude prices fell after reaching last week high levels have not seen since the end of 2014, amid the escalation of tension ahead of the attack in the troubled Middle East.

“The strike on chemical sites in Syria signals the end of the last crisis,” said Joshua Mahoney, an analyst at IG.

The FTSE-100 slipped as oil prices fell 0.5 points in afternoon trade.

British shares fell 1.3 percent, while Shell lost 0.6 percent.

In the euro area, Frankfurt and Paris fell about 0.1 percent.

On Monday, Wall Street opened higher, supported by data showing retail sales in the United States for the first time in four months. The Dow Jones rose 0.7 percent in the first minute of transactions.

“US stocks add to the rally last week in early trading, while the US-led missile strikes on Friday night did not raise fears of escalating tensions with Russia and Iran,” analysts at Charles Schwab said.

While air strikes in Syria were widely supported, Moscow condemned them as illegal and warned that they would cause “chaos” in international relations.

The strikes also coincided with a trade dispute between the United States and China. Many fear the impact on the global economy if the two sides impose mutual customs duties on goods worth billions of dollars.

Most of Asian markets fell on Monday, but the Tokyo stock market posted gains.