Business World

Thursday 23 January 2020

Oil price jumps amid growing Iran tension

 

Iranian people carry pictures of Iran's Supreme Leader Ayatollah Ali Khamenei during a funeral for Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, who were killed in an air strike at Baghdad airport, in Tehran, Iran January 6, 2020. Official Khamenei website/Handout via REUTERS
Iranian people carry pictures of Iran's Supreme Leader Ayatollah Ali Khamenei during a funeral for Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, who were killed in an air strike at Baghdad airport, in Tehran, Iran January 6, 2020. Official Khamenei website/Handout via REUTERS
Ellie Donnelly

Ellie Donnelly

Global oil prices have surged above $70 (€63) a barrel on fears of rising tensions in the Middle East after the assassination of one of Iran's top generals by the US.

The price of Brent crude oil is up 5pc in recent days, but this has not yet fed through to consumers or industry here, and may not, if the spike proves short-lived, according to industry experts.

Prices got a further boost yesterday as US president Donald Trump reiterated threats of retaliation, should Iran "do anything", and vowed heavy sanctions against Iraq if American troops were forced to leave the country.

Tensions in the already volatile region are high after Friday's killing by the US of Iranian general Qassim Suleimani.

Please log in or register with Independent.ie for free access to this article.

Log In

As well as oil, gold is in demand. Spot gold gained 1.6pc to $1,579.55 an ounce, and its highest since April 2013.

The latest rise in the price of oil per barrel will only affect consumers if it is sustained, according to Conor Faughnan, director of consumer affairs at AA Ireland.

"We don't yet know if that's the case," Mr Faughnan said.

In the longer term, the outlook for global economic growth has a greater impact on prices, he said.

In addition, any increase in price typically takes three to four weeks before it is passed on to consumers at the petrol pumps and in the form of higher heating bills.

The market for oil is also benefiting from being reasonably well supplied, according to Job Langbroek, analyst at Davy Stockbrokers.

"There is a spike in prices, but it is not exceptional; other spikes have fallen off very quickly and the market is reasonably well supplied," Mr Langbroek said.

On European stock markets, pan-region Euro Stoxx 50 futures eased 0.6pc, and German DAX futures and FTSE futures fell.

Among European airline operators, Ryanair and Aer Lingus owner IAG is the most insulated against price increases, while Air France-KLM is most vulnerable, according to Credit Suisse analysts.

Irish Independent

Also in Business