Oil prices soared more than 4 percent Friday following news that the US had killed a top Iranian general
, fanning fresh fears of a conflict in the crude-rich region.
READ: Fresh Mideast conflict feared
The head of Iran’s Quds Force, Qasem Soleimani, was hit in an attack on Baghdad’s international airport early Friday, according to Hased, a powerful Iraqi paramilitary force linked to Tehran.
Later, Donald Trump tweeted a picture of the American flag, and the Pentagon said he had ordered Soleimani’s killing.
Brent surged 4.4 percent to $69.16 and WTI jumped 4.3 percent to $63.84 as investors grow increasingly worried about the effects of a possible flare-up in the tinderbox Middle East on supplies of the commodity. Both contracts later pared the gains but remained well up.
“This is more than just bloodying Iran’s nose,” said AxiTrader’s Stephen Innes. “This is an aggressive show of force and an outright provocation that could trigger another Middle East war.”
The killing of Soleimani is a dramatic escalation of tensions between the United States and Iran and comes after a pro-Iran mob this week laid siege to the US embassy in Iraq following deadly American airstrikes on the hardline Hashed faction.
The attack on the embassy highlighted new strains in the US-Iraqi relationship, which officials from both countries have described as the “coldest” in years.
Oil prices saw a record surge in September after attacks on two Saudi Arabian facilities briefly slashed output in the world’s top exporter by half, with Trump blaming Iran for the attack and previous other blasts on tankers in the Gulf last year.
The crisis also comes as tensions between the US and North Korea worsen, with Kim Jong Un declaring a self-imposed moratorium on nuclear and intercontinental ballistic missile tests had ended, with US talks going nowhere.
“We are waking up to a less safe world than it was only hours ago, especially if we combine this with simmering tension in the Korean peninsula,” Innes added.
The drama sent investors rushing for the hills and safe-haven units rallied with the yen up 0.7 percent against the dollar and gold climbing more than 1 percent.
High-risk currencies retreated against the greenback, with South Korea’s won down 0.6 percent, Australia’s dollar down 0.4 percent and the South African rand down more than 1 percent.
Equities were mixed, having been enjoying the second day of the year rallying on trade optimism.
Hong Kong fell 0.2 percent by the break, while Shanghai shed 0.3 percent. Singapore retreated 0.5 percent and Taipei dropped with Mumbai. But Seoul, Sydney, Wellington, and Manila were in positive territory.
Markets had all been well up before news of the strike, thanks to ongoing optimism fueled by the China-US trade agreement, looser central bank monetary policies and easing Brexit worries.
In the Philippines, the Energy Department said it is closely monitoring the movement of prices in the world market in light of the most recent events.
The Philippines imports more than 99 percent its oil requirements and is vulnerable to any oil price movement in the world market.
The Philippines imported 73.9 percent of its crude oil requirement from the Middle East in the first half of last year, of which 32.2 percent came from UAE, which replaced Saudi Arabia as the top supplier of crude oil into the country.
Kuwait was next with a 26.3 percent share of the total crude mix, followed by Russia and Saudi Arabia with 14.5 and 12.2 percent share, respectively.
On the other hand, 9.3 percent of the crude import mix originated from the ASEAN Region while 2.2 percent were from Australia, Taiwan, and South Korea during the period.
In September, oil prices soared by P2 per liter after the air attacks on Saudi Arabia’s oil facilities.
The rise in world oil prices is expected to add to the burden of consumers, oil companies implement the higher excise tax for 2020 as mandated under the tax reform law.
The new excise taxes will mean that consumers will pay P1.12 more per liter of gasoline and kerosene, and P1.68 more per liter of diesel.
Energy Undersecretary Felix William Fuentebella said the department is set to inspect the oil companies’ retail stations to ensure their compliance.
READ: Trump threatens Iran after attack