Analysts at political risk consultancy, Eurasia Group, in a research note published on Friday said oil price could hit $80 per barrel soon, following the assassination early Friday of General Qasem Soleimani, Iran’s foremost military commander in a drone strike orchestrated by American forces at Baghdad International Airport.
They said, “One thing is clear: Iran will respond. We expect moderate to low-level clashes to last for at least a month and likely be confined to Iraq. Iranian-backed militias will attack U.S. bases and some U.S. soldiers will be killed; the U.S. will retaliate with strikes inside of Iraq.”
According to them, oil prices “will likely hold” around $70 a barrel, “but could make a run at $80 if the conflict spreads to the oil fields of southern Iraq or if Iranian harassment of commercial shipping intensifies.”
Soleimaini, charismatic leader of Quds Force – a division primarily responsible for extraterritorial military and clandestine operations of the oil-rich Islamic republic, was killed alongside members of local Iran-backed militias.
The Pentagon has claimed responsibility for the operation, saying it acted on the direction of US President Donald Trump.
“At the direction of the president, the US military has taken decisive defensive action to protect US personnel abroad by killing Qasem Soleimani.
“The United States will continue to take all necessary action to protect our people and our interests wherever they are around the world,” the Pentagon said.
It further said Soleimani “was actively developing plans to attack American diplomats and service members in Iraq and throughout the region,” adding that “This strike was aimed at deterring future Iranian attack plans.”
Soleimani’s murder, according to BBC, “marks a major escalation in tensions between Washington and Tehran.
62-year old Soleimaini was regarded by many as the second most powerful person in Iran after Ayatollah Ali Khamenei, Iran’s Supreme Leader.
Khamenei, in the wake of the assassination, said “severe revenge awaits the criminals” behind the strike.
The killing was a reprisal of sorts after worsening tensions between the US, Iran and Iran-backed groups in Iraq following the murder of an American military contractor in a missile on US base in Iraq, which the US has held Iraq responsible for.
The US-Iran relations had suffered series of setbacks since the US pulled out of a nuclear deal with Iraq and world powers in a measure to curtail Iran’s nuclear programme and restrain it from developing nuclear weapons. Equally, the US re-imposed sanctions on Iran, which triggered a free fall in Iran’s economy.
Global oil prices on Friday skyrocketed by over 4% after the death of the silver-haired general and other Iranian military leaders was announced. The Brent Crude Oil soared by 4.4% to $69.16 per barrel (the highest since 17th September 2019), West Texas Intermediate (WTI) leapt by 4.3% to $63.84.
It is probable that oil prices will rise further as the day goes by. Beyond prices, the far-reaching implications of the strike could trigger disruption in oil supplies in the global market.
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