Oil 3% up with tensions in Middle East

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NEW YORK/LONDON/SINGAPORE

Crude oil prices were up by around 3% during Friday’s trading start as rising tensions in the Middle East threaten secure crude supply from the region.

International benchmark Brent crude was trading at $68.18 per barrel at 0615 GMT with a 2.83% increase after closing Thursday at $66.30 a barrel.

American benchmark West Texas Intermediate was at $62.91 a barrel at the same time with a 2.88% gain after ending the previous session at $61.15 per barrel. The U.S. confirmed Thursday that it carried out a strike that killed Qasem Soleimani, the commander of the Iranian Revolutionary Guards Corps’ Quds Force, in the Iraqi capital Baghdad.

The Pentagon accused Soleimani of planning to carry out attacks on U.S. diplomats and service members in Iraq and the region, saying the slain leader was responsible for the deaths of hundreds of American and coalition service members. Iranian Foreign Minister Javad Zarif harshly reacted to the killing of Solaimani.

“The US bears responsibility for all consequences of its rogue adventurism,” Zarif wrote on Twitter. The Middle East is home to almost half of the world’s proved oil reserves and accounts for one-third of global oil production. Crude oil jumped by more than 4 percent in early trade after an air strike at Baghdad Airport early Friday killed Maj. Gen. Qassem Soleimani, the leader of Iran’s elite Quds Force.

Brent Crude and West Texas Intermediate (WTI) oil rose by the most since the Sept.16, 2019 attacks on Saudi Arabia’s biggest oil processing facility. Gold rose 1 percent on Friday morning while US futures were down by the same measure.

“We are only into the third day of the new year, and a big fat dollop of geopolitical uncertainty has landed on investors desks already this morning,” said Jeffery Halley, senior currency analyst at OANDA. “My first thoughts are that Commander Soleimani was a very big cheese in the Iranian hierarchy, and I am struggling to see how an Iranian riposte will not occur.”

Iraq’s Oil Ministry confirmed that some US citizens employed by international oil companies in Basra were leaving the country, adding that oilfields were operating normally. Gulf bourses were closed for the weekend as traders digested the news and the focus turned to the security of shipping in the Gulf.

“We expect moderate to low level clashes to last for at least a month and likely be confined to Iraq,” Eurasia’s Iran analyst, Henry Rome, told Reuters. “Iran will also likely resume harassment of commercial shipping in the Gulf and may launch military exercises to temporarily disrupt shipping,” he said. “With further escalation remaining a distinct possibility, we could see markets retain at least some risk premium,” JBC Energy said in a research no

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