The world economy is already being impacted by the American assassination of Iran’s military leader Qassem Soleimani. The Iranians will not stand idly by and let this targeted killing go unanswered.
Wall Street Journal 1.2.2020
Escalation in tensions between Washington and Tehran could threaten world’s crude supplies.
U.S. crude futures recently advanced 2.8% to $62.86 a barrel.
The price of oil surged late Thursday after the killing of an Iranian military leader in a U.S.-authorized strike, an escalation in tensions between Washington and Tehran that could threaten the world’s crude supplies.
Oil analysts have long warned that conflict between the U.S. and Iran poses a threat to global crude supply and could be underappreciated by investors who for months have focused on the U.S.-China trade war and threats to oil demand.
Oil rose sharply on the news in futures-market trading, with Brent crude rallying about 4%, before paring some of its gains after the Pentagon said President Trump authorized the strike that killed Qassem Soleimani, leader of Iran’s Islamic Revolutionary Guard Corps’ foreign wing. Brent recently traded up nearly 3% at $68.20 a barrel.
If that move held Friday, it would put prices near their highest level since mid-September, when they soared following attacks in Saudi Arabia that took out a large chunk of the kingdom’s production capacity.
After the September Saudi attacks, prices later retreated following signals that the disruptions weren’t as severe as expected, illustrating the volatility that can roil energy markets after unexpected geopolitical events in the Middle East. Those attacks were blamed on Iran. The U.S. didn’t strike back at Iran after that attack, but it sent troops to strengthen Saudi defenses.
Still, a sustained rise in fuel prices as a result of fresh tensions in the region could mark a threat to the world economy by increasing gasoline costs for consumers and companies. U.S. crude futures advanced 2.8% to $62.86 a barrel Thursday evening.
“With trade-war fears receding, the heightened tensions in the Middle East may be poised to make a more meaningful impact on the oil market in 2020,” RBC Capital Markets analysts said in a recent note to clients.
Stock futures fell following the latest clash in the U.S.-Iran rivalry, with S&P 500 futures dropping 0.5% after the broad equity gauge closed at a fresh record Thursday.
Write to Amrith Ramkumar at email@example.com