After news broke out that the United States has killed a top Iranian general, oil prices are quick to soar up.
Oil prices are now up by more than four percent because of what happened, which fueled fresh fears that a new and intensified conflict is brewing the region.
Unfortunately, the region is crude-rich, and whatever is happening there, it can affect the whole world because of oil prices.
The head of Iran’s Quds Force, Qassem Soleimani, died in an attack of Baghdad’s International Airport early Friday.
According to Phil Star, this is reported by Hased, an influential Iraqi paramilitary force with strong links to Tehran.
After the said incident, US President Donald Trump dared to take to his social media about Soleimani’s fate.
He posted a picture of the American flag, and the Pentagon said he was the one who ordered the general’s killing.
Demonstrating how interrelated politics and economics are, Brent quickly surged 4.4 percent to $69.16, and WTI jumped 4.3 percent to $63.84.
These are indicators that investors are increasingly anxious that a possible flare-up in the Middle East will occur, affecting oil supplies. Both contracts subsequently pared the gains, but It was still up.
The US Triggered Another Middle East War?
According to Stephen Innes of Axi Traders, the attack was more than what it appears on the surface. It is already a demonstration of outright aggression and provocation that can lead to another Middle East War.
The killing of Soleimani exhibits a dramatic escalation of already-tensed relations between the United States and Iran.
Just this week, a pro-Iran mob laid siege to the US Embassy in Iraq, and while that had been intense, few anticipated this level of aggression from the United States.
The mob was there to protest deadly American airstrikes that took place against the hardline Hashed faction.
Officials already told AFP that the current US-Iraqi relationship had been the coldest in years, well before Soleimani’s killing.
It remains to be seen what will happen to this coldness.
Oil Prices to Definitely Increase
Regardless, this means oil prices will undoubtedly be affected.
After attacks on two Saudi Arabian facilities back in September, oil prices went up quickly. The attack slashed output in the world’s top exporter of oil by around 50 percent.
At the time, Trump blamed Iran for the attack. He also attributed all the previous blasts on tankers last year to Iran.
It is not only a US relationship with Iran that is currently tumultuous. The tensions between the US and North Korea are also intensifying.
The present drama sent investors scurrying fast towards less risky investments. Safe haven units rallied with the yen. South Korean’s won is now down 0.6 percent. The same downward trend can be seen with Australia’s dollar (down 0.4 percent) and South African rand (down over 1 percent).
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