Oil prices hit there highest since April after President Trump attacked Iran killing Qasem Soleimani.
Oil prices surged 3% on Friday following confirmation by the Pentagon that Iran’s top commander was killed in a U.S. airstrike in Baghdad, raising concerns of a bigger conflict between the two countries that could disrupt energy production in the region.
The U.S. military took the “decisive defensive action to protect U.S. personnel abroad by killing Qasem Soleimani,” a statement by the U.S. Department of Defense said Thursday night. It was a directive from the U.S. president, the DOD said.
International benchmark Brent crude gained $2.42, or 3.6% to trade at $68.67, after earlier trading as high as $69.50. U.S. West Texas Intermediate gained $1.87, or 3%, to settle at $63.05 per barrel. Earlier in the session WTI traded at $64.09, its highest level since April.
Oil will likely give back some of its gains but if Iran retaliates a bigger jump
“It’s been a knee jerk reaction because everybody is asking the question how is Iran going to retaliate, and I think that’s why you’ve seen prices jump 3, 4%,” Energy Aspects’ Amrita Sen said Friday on CNBC’s “Worldwide Exchange.” “The real risk is how does Iran retaliate. We’ve seen what it can do in Saudi Arabia, does it do similar stuff again, is there another attack on Saudi facilities.”
She said retaliation will likely “take some time,” and that in the meantime oil might give back some of its gains.
“This market is extremely complacent. It never takes into account just how tight the market it … the general view in the market has been ‘oh the world is awash in oil’ however incorrect it is, and unless an actual outage lasts, I’m not sure we’re going to sustain this rally just yet,” she added.
Oil prices could surge toward $80 a barrel if escalating geopolitical tensions disrupt Middle East crude supplies, analysts told CNBC on Friday, with energy market participants “on tenterhooks” after a U.S. airstrike killed key Iranian and Iraqi military personnel.
This is why it is nonsense to think that President Trump is doing this for re-election. War with Iran actually hurts his re-election chances because it affects his number one re-election argument, the economy.
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