EghtesadOnline: Oil prices rose a further 2% on Monday, pushing Brent above $70 a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after a US air strike which martyred a top Iranian military commander in Iraq.
Brent crude futures soared to a high of $70.74 a barrel, up $1.14, or 1.66%, from Friday’s settlement, Reuters reported.
US West Texas Intermediate crude was at $63.92 a barrel, up 87 cents, or 1.38%, after touching $64.72, the highest since April, according to Financial Tribune.
The gains extended Friday’s more than 3% surge after a US air strike killed Qassem Soleimani and his comrades on Friday, heightening concerns about an escalation in conflict in the Middle East and the possible impact on oil supplies.
The region accounts for nearly half of the world’s oil production, while a fifth of the world’s oil shipments pass through the Strait of Hormuz.
On Sunday US President Donald Trump threatened to impose sanctions on Iraq, the second largest producer among the Organization of the Petroleum Exporting Countries, if US troops were forced to withdraw from the country. Baghdad earlier called on US and other foreign troops to leave Iraq.
Trump also said that the United States would retaliate against Iran if Tehran were to strike back after the killing.
“The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks,” said Norbert Rucker, head of economics at Swiss bank Julius Baer.
“Geopolitics tend to be a temporary force on oil markets and we believe this time is no different. We raise our near-term forecast to $65 per barrel, and maintain a neutral view”.