However, fundamentals point to an amply supplied market, said JBC Energy. "While the situation on the geopolitical side appears to be mired by instability, on the economic front, positive signals from the US and European economies are underpinning expectations of an improvement in global economic growth this year," they wrote in a note to clients.
Oil prices are being injected with more geopolitical tensions after Mr Obama's announcement and if investors start to price in the events in Iraq and Russia, Brent may surge way above $US110 a barrel, Mr Gan said.
President Obama said the US would act to protect American personnel and prevent a humanitarian catastrophe. "Right now the market reaction is how the market typically reacts when there is headline news on geopolitical tensions.
Acceleration in US growth, a gradual recovery in Europe, and a stabilising China all lead JBC to an outlook on the global economy which is positive in the short-term "with developed countries spurring growth, while the downside risks appear to be contained at present.
Read more here: Business Spectator