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Oil Soars Following U.S. Killing Of Iran’s Top General

Qassem Soleimani

Oil prices soared early on Friday morning after U.S. forces in Iraq assassinated Iran’s most powerful and visible military leader, Qassem Soleimani.

The United States killed the Iranian general in an airstrike early on Friday morning according to Pentagon reports. Influential Iraqi militia commander and advisor to Soleimani, Abu Mahdi al-Muhandis, was also killed in the attack according to a militia spokesman.

According to Al-Jazeera, the general was killed on his way to the airport in Baghdad, in what appears to be a series of targeted airstrikes on a convoy of vehicles carrying ‘’high profile’’ guests which were being escorted from the airport by Iraq's Popular Mobilisation Forces (PMF), an Iran-backed group of militias.

Later this morning, The White House and the Pentagon confirmed the killing of the Iranian commander, stating the attack was carried out following a direct order from US President Donald Trump and was aimed at ‘’deterring future attacks’ on U.S. diplomats and service members throughout the region.

According to the Pentagon, the attack was a ‘defensive action’

U.S. President Trump has not yet responded to the high-profile assassination, but tweeted an image of the American flag with no commentary


The airstrike that killed Qassem Soleimani and Abu-Mahdi al-Mohandis can be seen as a major blow to Iran and as a direct response to last week’s attack on the U.S. embassy in Iraq by Iranian backed militias. Related: Iran Wants To Start Oil & Gas Production In This Disputed Hotspot

Iran’s Soleimani was not just the commander of its elite Quds forces, he was also the driving force behind covert operations throughout the entire Middle East, defending Iran’s interests in Iraq, Yemen and Lebanon and was also said to have played a key role in the attacks on Saudi oil assets in September 2019.

The General was known to be one of the hardliners in Tehran and vowed to preserve the Iranian Republic in its current form. Feared by some, the general became some sort of an icon in Iranian popular culture, with his face being printed on banners and t-shirts.  Also notable was his strong personal relationship with supreme leader Ayatollah Khamenei from which he received Iran’s highest military decoration earlier this year.

Iranian leaders are expected to be gathering within the next couple of hours, and a firm response from Tehran can be expected within the next few days.

Iran’s supreme leader Khamenei has threatened "severe retaliation" against the "criminals" who killed Qasem Soleimani and has declared three days of national mourning following the death of the general.


Oil prices jumped more than 3% following the event, and can be expected to rise further towards the end of the week as geopolitical risk throughout the entire region just exploded.

By Tom Kool of Oilprice.com

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  • Mamdouh Salameh on January 03 2020 said:
    Oil prices jumped more than 3% after US forces in Iraq assassinated Iran’s most powerful military leader, General Qassem Soleimani and also the influential Iraqi militia commander and advisor to Soleimani, Abu Mahdi al-Muhandis.

    The attack was not only a serious escalation of tension between the United States and Iran but also a violation of Iraq's sovereignty.

    Oil prices could rise further depending on Iran’s response. The Supreme Leader Ayatollah Ali Khamenei vowed “harsh revenge” for today’s US strikes.

    However, the global oil market is well supplied with oil particularly as a result a huge glut which has been augmented to an estimated 4.0-5.0 million barrels a day (mbd) by two years of trade war between the US and China.

    Sill if Iran’s retaliation really hurts the United States, then there is a real possibility that the conflict could get out of hand and escalate into an armed conflict. In such a situation, prices could rocket particularly with Iran threatening to block the Strait of Hormuz.

    However, Iran’s retaliation will most probably be measured and aimed to hurt the United States but not to lead into war between them.

    Iran could take one of these measures.

    1- It could exert maximum pressure on the Iraqi government to demand the full withdrawal of all US forces from Iraq. This is something the assassinated General Soleimani has been working on. But with a weak government in Baghdad, the prospect of it happening is low.
    2- It could order its militia in Iraq to ransack the American Embassy in Baghdad and take some American diplomats hostages.
    3- Alternatively, Iranian militia operating in Syria could attack American forces occupying Syria’s oilfields in the Deir Ezzor region and try to kill or take some American troops hostages.
    4- Iran could also order its militia in Iraq to attack American forces and kill or take some hostages.

    Short of a war between the two countries, oil prices will return to around $66-$67 a barrel after the Iranian retaliation.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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