Oil prices surge in fear of Middle East conflict following Soleimani’s death

Oil prices soared more than four percent Friday and equities reversed early gains following news that the US had killed a top Iranian general, fanning fresh fears of a conflict in the crude-rich region.

Oil

Oil prices soared more than four percent Friday and equities reversed early gains following news that the US had killed a top Iranian general, fanning fresh fears of a conflict in the crude-rich region.

The head of Iran’s Quds Force, Qasem Soleimani, was hit in an attack on Baghdad’s international airport early Friday, according to Hased, a powerful Iraqi paramilitary force linked to Tehran.

Later, Donald Trump tweeted a picture of the American flag, and the Pentagon said he had ordered Soleimani’s killing.

Iranian Leader Ayatollah Ali Khamenei paid tribute to him as a “martyr”, and vowed a “vigorous revenge is waiting for the criminals.”

Iranian Foreign Minister Javad Zarif also condemned the killing as an “act of international terrorism.”

“The US bears responsibility for all consequences of its rogue adventurism.”

Brent surged 4.4 percent to $69.16 and WTI jumped 4.3 percent to $63.84 as investors grow increasingly worried about a possible flare-up in the tinderbox Middle East.

“This is more than just bloodying Iran’s nose,” said AxiTrader’s Stephen Innes. “This is an aggressive show of force and an outright provocation that could trigger another Middle East war.”

Read more: Global Oil Prices on a Decline

The killing of Soleimani is a dramatic escalation of tensions between the US and Iran and comes after a pro-Iran mob this week laid siege to the US embassy in Iraq following deadly American airstrikes on the hardline Hashed faction.

The attack on the embassy highlighted new strains in the US-Iraqi relationship, which officials from both countries have described to AFP as the “coldest” in years.

It also comes as tensions between the US and North Korea worsen, with Kim Jong Un declaring a self-imposed moratorium on nuclear and intercontinental ballistic missile tests had ended, with talks with the US going nowhere.

“We are waking up to a less safe world than it was only hours ago, especially if we combine this with simmering tension in the Korean peninsula,” Innes added.

Brent surged 4.4 percent to $69.16 and WTI jumped 4.3 percent to $63.84 as investors grow increasingly worried about a possible flare-up in the tinderbox Middle East

The drama sent investors rushing for the hills and safe-haven units rallied with the yen up 0.7 percent against the dollar and gold climbing more than one percent.

High-risk currencies retreated against the greenback, with South Korea’s won down 0.6 percent, Australia’s dollar down 0.4 percent and the South African rand down more than one percent.

Read more: Oil prices rocket to record high after attacks on Saudi facilities

Equities sank into the red, having been enjoying the second day of the year rallying on trade optimism.

Hong Kong fell 0.2 percent, while Shanghai shed 0.1 percent. Singapore retreated 0.2 percent, Seoul lost 0.1 percent and Taipei eased 0.3 percent. However, Sydney, Wellington, and Manila held in positive territory.

Markets had all been well up before news of the strike, thanks to ongoing optimism fuelled by the China-US trade agreement, looser central bank monetary policies and easing Brexit worries.

Key figures around 0230 GMT

Hong Kong – Hang Seng: DOWN 0.2 percent at 28,487.39

Shanghai – Composite: DOWN 0.1 percent at 3,082.05

Tokyo – Nikkei 225: Closed for a public holiday

Pound/dollar: DOWN at $1.3131 from $1.3139 at 2200 GMT

Euro/pound: DOWN at 84.98 pence from 85.02 pence

Euro/dollar: UP at $1.1176 from $1.1172

Dollar/yen: DOWN at 108.03 from 108.54 yen

Brent Crude: UP $1.30 at $67.55 per barrel

West Texas Intermediate: UP $1.14 at $62.32 per barrel

New York – Dow: UP 1.2 percent at 28,868.80 (close)

London – FTSE 100: UP 0.8 percent at 7,604.30 (close)

GVS News Desk with additions from news agencies. 

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