Brent At $106 On Geopolitical Concern

Brent crude oil began the week on a high note after a jump on Friday due to geopolitical concerns. The commodity traded at $106.25 at 8:51 GMT on Monday morning as investors anticipated the outcome of a two day policy meeting for the US Federal Reserve and cautiously eyed tension in the Middle East.

Ever since Fed Chairman Ben Bernanke indicated that the US central bank could ease up on its $85 billion quantitative easing plan if the nation's unemployment figures improve, US economic data has been driving oil prices as the investors try to predict when the Fed will cut back. Now as the US central bank gears up for a two day meeting, investors will be anxiously watching for any clues about when the bank plans to ease up on its stimulus.

Despite lackluster economic data and trimmed global demand outlooks from the International Energy Agency, OPEC and the US Energy Information Administration, Brent prices jumped last week. Escalating tension in the Middle East has reignited worries that the region's ongoing conflict could create a supply interruption.

After Barack Obama authorized the decision to arm rebels fighting Syrian President Bashar al-Assad last week, many have worried that the Syrian civil war is becoming a larger fight between the US and the Iranian Hezbollah. According to CNBC, Obama is set to talk to Russia's Vladimir Putin about uniting to end the two-year civil war on Monday.

This weekend's presidential elections in Iran are also on investors' minds as many wonder if the new Iranian president, Hassan Rohani, will impact the West's negotiations with Iran over its nuclear technology. Currently, sanctions designed to cut funding to the nation and kept the majority of Iran's oil from the market.

Despite geopolitical concerns, most analysts agree that Brent's recent spike won't be maintained for long under the current conditions. Without the dollar weakening or escalation in the Middle Eastern conflict, most are expecting to see Brent prices slip in the short term.

BY Laura Brodbeck