Oil hits six-month high upon Middle East tensions

An Aramco oil facility near al-Khurj, just south of Saudi Arabia’s capital Riyadh. (File photo: AFP)

Oil prices continued to rise on Monday as tensions escalate in the Middle East. Especially after the assassination of Iran’s Islamic Revolutionary Guards Corps (IRGC) commander Qassem Soleimani on Friday.

Brent crude futures were up over 2% and reached a six-month high of $70.17 per barrel. While WTI Crude also gained over 2% to $64.72.

Prices could continue to rise should the geopolitical situation further deteriorate.

“The reaction of oil was far from unforeseeable, with an immediate increase in prices following the US attack on Soleimani,”

Mario Vanella, global chief economist at Orient Research Centre said.

“A retaliatory spiral would support upward movement in prices. As mentioned in other moments, the geopolitical risk premium in oil is far from being priced-in. This appeared once again by this eventful start of the year,” he also said.

Monday’s oil price spike pushes the commodity over the highs. The first after the drone attacks on two Saudi Aramco facilities in September last year.

It’s noteworthy that this attack knocked 5% of global oil supply offline by then.

Oil prices had risen more than 4% on Friday after the US killed Soleimani and Iraqi militia commander Abu Mahdi Al-Mohandes in an airstrike, prompting Iranian officials to vow revenge.