U.S. West Texas Intermediate and international-benchmark Brent crude oil futures hit their highest levels since April on Friday after the killing of a top Iranian general sparked fears of a broader conflict that could disrupt the energy supply and drag down the global economy.
Short-covering and aggressive speculative buying drove crude oil prices sharply higher after the U.S. airstrike ordered by President Donald Trump killed Iran’s top general, Qasem Soleimani, in Baghdad. Soleimani had been a key figure in Iranian politics, and his death has raised concerns over a potential retaliation from the Iranian forces.
So far there has not been a disruption in supply so gains have been limited. However, Iran has vowed to retaliate. Previous aggressive activity has included bombing a Saudi Arabian production facility and attacking oil tankers.
Shortly after the attack, Iranian Foreign Minister Mohammad Javad Zarif warned Friday that the targeted killing of Soleimani was “extremely dangerous & a foolish escalation.”
“The U.S. bears responsibility for all consequences of its rogue adventurism,” Zarif said on Twitter.
Prior to the jump in prices on Friday, the markets were being underpinned by traditional supply and demand fundamentals that controlled the price behavior from December 1 until the end of the year.
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