Oil prices soar after US kills senior Iranian general in Iraq

Monday, January 6th, 2020 00:00 |
Oil exploration. Photo/Courtesy

PETROLEUM:  Oil prices have risen sharply after the killing of a top Iranian general in Iraq.

Analysts warned the action could escalate tensions in the region and affect global oil production.

The price of Brent crude jumped by more than three per cent and at one point hit $69.5 (Sh7,016.34) a barrel, the highest since September.

It came after General Qasem Soleimani was killed in a US drone strike at Baghdad airport, which the Pentagon described as “defensive action”.

The price spike pushed oil stocks on the London stock exchange higher, with BP up 2.7 per cent and Royal Dutch Shell nearly 1.9 per cent higher.

Shares in US oil companies such as Exxon Mobil dropped, however, amid a wider US market fall prompted by weak manufacturing data and concerns about the implications of the Middle East conflict.

 The Dow and the Nasdaq closed down about 0.8 per cent, while the S&P 500 dropped by 0.7 per cent. 

The declines followed record highs a day earlier.

“2020 opened on a very positive note,” said Aneeka Gupta of WisdomTree Investments.  

“This event has actually stalled the bullish optimism we have seen,” said Gupta


Tensions between the US and Iran have been rising since 2018, when the US pulled out of a nuclear deal meant to curb Iran’s nuclear programme and prevent the country from developing nuclear weapons.

The US also re-imposed sanctions on Iran, a move that has shattered the country’s economy and severely restricted its oil exports.

This recent strike has sparked fears of increased risk to energy supplies in the region. The price of the international benchmark, Brent Crude, climbed 3.5 per cent on Friday, while US oil - known as West Texas Intermediate - increased about three per cent.

If the strike leads to wider military confrontation, that could prompt an even bigger spike in prices.  – BBC

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