We know the price of oil fluctuates, but this is ridiculous.
As reported by The Wall Street Journal, the price of crude oil futures rose by over $1 on Monday after a Twitter account claiming to be that of Russian interior minister Vladimir Lolokstev falsely reported that Syrian President Bashar al-Assad had been killed or injured. The false tweets were followed up by two more claiming to confirm the death of the Syrian leader who is currently engaged in armed conflict with anti-government protestors.
In the hour following the tweets, light, sweet crude prices rose from $90.82 to $91.99 on the New York Mercantile Exchange, with the jump in price taking place between 10:15 and 10:45. According to a Reuters report, the Russian ministry disavows any knowledge or involvement of the false reports as well as any link to the account.
Of course, crude oil markets have always been beholden to the slightest developments – whether true or false — in regions where production is concentrated. In addition to the current conflict within Syria — which itself is not a major producer of oil — concern has arisen between the West and Iran over the country’s continued nuclear program. With tensions flared, and amid threats of sanctions against Syria, the Iranian government, a major supporter of the Assad regime, has threatened to close off the Straight of Hormuz, through which a third of the world’s crude passes.
As of July 2012, the International Committee of the Red Cross and the Red Crescent have officially declared Syria to be in a state of civil war, with the nationwide death toll for all sides reported to to be nearly 20,000.
Though the reports proved false, the continued conflict in the Middle East and the rapid-fire nature of social media, suggest that, in all likelihood, similar events will continue to take place. As analyst Phil Flynn of Price Futures Group pointed out, “a well-placed story can move the market, and that looks like what happened.”
If nothing else, there are three things that have been confirmed: the power of social media; the unfortunate, yet continued volatility of the Middle East; and the knee-jerk reaction in in which the oil industry operates.