Oil hits six-month high as Middle East tensions escalate

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

Brent crude futures were up over 2 percent and reached a six-month high of $70.17 per barrel, while WTI Crude also gained over 2 percent 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,” said Mario Vanella, global chief economist at Orient Research Centre.

“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, and this was shown once again by this eventful start of the year,” he said.

Monday’s oil price spike pushes the commodity over the highs seen following the drone attacks on two Saudi Aramco facilities in September last year which knocked 5 percent of global oil supply offline.

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

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