Oil prices soared to the highest level in more than three months today (Jan 3) after the US killed Major-General Qassem Soleimani, Iran’s most powerful figure after its supreme leader, in an airstrike in Iraq.
The killing sparked fears that escalating conflict in the Middle East could disrupt global oil supplies.
Brent crude was up 3% or $1.96 a barrel at $68.21, just off the session peak of $69.50 a barrel, highest since the mid-September attack on Saudi oil facilities. West Texas Intermediate (WTI) crude was up $1.52 or 2.5% at $62.70 a barrel. The session high was $64.09 a barrel, its highest since April 2019, said a Reuters report.
The US airstrike at Baghdad airport killed Soleimani, architect of Iran’s spreading military influence in the Middle East, with Iran’s Supreme Leader Ayatollah Ali Khamenei vowing revenge.
US Secretary of State Mike Pompeo said Soleimani was planning attacks on US facilities and workers in Iraq, Lebanon, Syria, and other countries, the Reuters report said.
Tensions between the US and Iran have flared over the past year as Washington reimposed sanctions on Tehran and in the aftermath of a missile and drone attack on oil installations of the Saudi Aramco company that US officials blamed Iran for.
The Soleimani attack has brought those tensions back to the forefront, fanning worries about a squeeze on crude supplies, though the effect of the increased geopolitical risk remains unclear.
Concern shifted to potential retaliation, and US oil companies were taking steps to evacuate workers from Iraq.
“The Iranian retaliation could take the form of a quick response by proxies against US allies and assets. One-off incidents targeting Gulf oil flows are possible, as are attacks on Gulf oil infrastructure after the Abqaiq incident did not trigger a US military response,” said Paul Sheldon, chief geopolitical risk analyst at S&P Global Platts.
The US embassy in Baghdad on Friday urged all citizens to depart Iraq immediately, and dozens of US citizens working for foreign oil companies in the Iraqi oil city of Basra were preparing to leave, company sources told Reuters.
All oil fields across the country were operating normally and production and exports were not affected, Iraq’s Oil Ministry said in a statement. It said no other nationalities were departing.
