Oil Ends Up For Third Straight Day Amid US-Iran Tensions

NEW YORK (UrduPoint News / Sputnik - 07th January, 2020) Oil prices settled up for a third day in a row after hitting near four-month highs at above $70 per barrel as the US killing of an Iranian general raised fears of war in the world's top hub for crude production.

Brent, the global benchmark for crude, settled up 31 cents, or 0.5 percent, at $68.91 per barrel on Monday as oil traders sent prices higher in the aftermath of the US drone attack near Baghdad airport on Friday that killed Qasem Soleimani, the commander of Iran's Revolutionary Guards' Quds force. However, in post-settlement electronic trade, Brent slipped into negative territory, with traders citing profit-taking.

Oil prices have spiked from a rash of tensions following Soleimani's killing. Iran said it was abandoning limits to uranium enrichment, a step required for making nuclear weapons. Iraq's parliament voted to expel US forces from the country, prompting President Donald Trump to threaten Baghdad with sanctions. Rockets also fell all over Iraq on Monday, with no human casualties reported. Separately, fighting has broken out in Libya.

Tehran and Washington have, meanwhile, exchanged strike threats. Iran's Supreme Leader Ayatollah Ali Khamenei has vowed "harsh revenge" for Soleimani's death while Trump said he has identified 52 targets in Iran, including sites of cultural prominence, in a plan for a counter attack that may be "disproportionate".

Brent hit a session peak of $70.75 earlier on Monday, responding to the escalating tensions.

The last time the global crude benchmark reached those levels was in the aftermath of the mid-September air raid on Saudi Arabia's oil facilities in Abqaiq, an attack the United States had accused Iran of masterminding.

"The situation today is very different from the attack on Abqaiq," said Olivier Jakob at oil risk consultancy PetroMatrix in Zug, Switzerland. "After the attack on Saudi Arabia, both the US and Saudi Arabia rapidly toned down instead of escalating. The opposite is true today, with both Iran claiming revenge and President Trump threatening to blow Iran apart."

Iran, Iraq and Libya, along with Saudi Arabia, are among the largest oil producers in the middle East, which accounts for 40 percent of the world's crude supply. Oil traders fear a breakout of war will seriously hamper movement of crude from the region to the rest of the world. Middle East crude supplies are already expected to be tighter this year than in 2018 due to sharper production cut pledges by the Organization of the Petroleum Exporting Countries and its top ally Russia under the so-called OPEC+ initiative.

Aside from Brent, West Texas Intermediate (WTI), the US crude benchmark, settled up 22 cents, or 0.3%, at $63.27 per barrel. Earlier on Monday, WTI reached a more than eight-month high at $64.72. Like Brent, WTI also slipped into the negative in Monday's post-settlement electronic trade.

Oil prices closed 2019 with their large gains in three years. Brent rose 24 percent on the year while WTI gained 34 percent.