Thursday 23 January 2020

Oil surges after US strike on Iran general

A man stands in front of a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai. Photo: Reuters
A man stands in front of a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai. Photo: Reuters

Saket Sundria and Grant Smith

Oil jumped toward $70 a barrel in London yesterday after a US airstrike ordered by president Donald Trump killed a top Iranian general in Iraq, intensifying fears of conflict in the world's most important crude-producing region.

Brent futures surged by more than 4pc to levels not seen since the attacks on Saudi Arabia's oil facilities in September.

The airstrike near Baghdad airport killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards' Quds Force.

"This is a seismic event in the region," said Jason Bordoff, a former Obama administration official who now works for Columbia University.

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"This is how US-Iran tit-for-tat spirals out of control. Iran's response will be severe and deadly. And certainly may include escalating attacks on energy infrastructure."

While no oil installations were affected, targeting one of Iran's most powerful generals ratchets up tension between Washington and Tehran, heightening fears of an armed confrontation. Iran's supreme leader, Ayatollah Ali Khamenei, vowed that "severe retaliation" awaits the killers.

Brent crude for March settlement climbed as much as $2.91 (€2.60), or 4.4pc, to $69.16 a barrel on the ICE Futures Europe exchange, and was at $68.62 in early trading.

The global benchmark's bullish options bias was the biggest since early November, while the closely watched spread between the December 2020 and December 2021 contracts was at the strongest level since October 2018.

West Texas Intermediate for February delivery was 3.6pc higher, at $63.36 a barrel, after advancing as much as 4.4pc to the highest level since May.

Total aggregate volume for Brent and WTI was about 10 times the 30-day average.

Bloomberg

Irish Independent

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