Oil rallies above $70 as US-Iran tensions intensify

Oil rallies above $70 as US-Iran tensions intensify
Oil rallies above $70 as US-Iran tensions intensify

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Hind Al Soulia - Riyadh - Oil surged beyond $70 per barrel during early trading on Monday as the US and Iran threatened military escalation following the assassination of Tehran's top military commander in Baghdad on Friday.

Brent surged 2.3 per cent to reach $70.19 per barrel at 10.49am UAE time, while West Texas Intermediate was up 1.3 per cent at $64.35 per barrel.

Brent, the benchmark for more than half the world's oil, climbed to an eight-month high, surpassing levels seen after the September 14 attack on Saudi 's oil facilities, which temporarily wiped out 5 per cent of global oil supply.

The rally in prices came following US President Donald 's threat to target 52 sites, including those of cultural importance within Iran, should the Islamic Republic initiate retaliation for the assassination of General Qassem Suleimani, the head of the elite Quds Force within the Islamic Revolutionary Guard Corps.

The military adviser to Iran's Supreme Leader, Hossein Dehghan, told CNN on Sunday that Tehran would retaliate in kind and would target US military sites.

"If he says 52 we say 300 — and they are accessible to us," he said.

President Trump said his earlier pronouncement on Twitter would serve as a notification to Congress and that the US would strike "in a disproportionate manner" if Iran attacked a US citizen or a target.

Tehran said it was scaling back on all its commitments to the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal, but would remain open to monitoring by the International Atomic Energy Agency.

"As 5th & final REMEDIAL step under paragraph 36 of JCPOA, there will no longer be any restriction on number of centrifuges," Iranian foreign minister Javad Zarif said on Twitter.

The US, under President Trump, walked away from the JCPOA nuclear deal in 2018. The agreement, signed by the P5+1 countries in 2015, constrained Iran's ability to enrich uranium to weapons-grade capability in return for a lifting of nuclear-related sanctions and facilitated the country's return to global financial markets.

Iraq's parliament also voted on Sunday to end the presence of foreign troops, including thousands from the US and planned to lodge a complaint with the UN over the killing of Suleimani.

Mr Trump said Washington would impose sanctions against Baghdad in retaliation for the parliamentary move.

"We've spent a lot of money in Iraq," he told reporters on board the presidential plane, Air Force One.

"We have a very extraordinarily expensive airbase that’s there. It cost billions of dollars to build … we’re not leaving unless they pay us back for it," he added.

Updated: January 6, 2020 12:54 PM

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