In a dramatic U-Turn, oil prices reached the highest level since December 2014 last week as rising tension in the Middle East made traders nervous. Over the weekend, President Trump made good on this threat to use force to punish Syria’s president Bashar al-Assad for an alleged chemical attack on civilians in the Damascus suburb of Douma. U.S., British and French forces struck Syria with more than 100 missiles.

The threat of conflict sent oil prices above the year’s previous high point of $66.66 per barrel, closing at $67.33 per barrel on Friday after trading as high at $67.75 per barrel earlier in the day. The run-up in prices was aided by reports that Saudi Arabia’s air defense forces intercepted three ballistic missiles fired at Riyadh and other cities on Wednesday by Yemen’s Houthi rebels.

The market will be heavily influenced by short-term geopolitical news next week with expectations that oil prices could rise again. Traders will be eagerly awaiting how Russia, Syria’s main ally and supporter, will react to the missile attack. Russia’s reaction has been muted so far, but the country has promised “consequences.”

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Fundamentals Dominate Away From the Noise

In the meantime, traders and investors are analyzing the fundamental market backdrop away from the immediate market volatility. Last week, the International Energy Agency (IEA) published a report in which it claims that OPEC and its partners’ push to clear the global oil supply glut is nearly complete. According to the IEA, the overall state of the cuts in March shows OPEC’s compliance rate at 163%, with its non-OPEC partners achieving a rate of 90%. The report concludes with the IEA commenting about the…