Intensified Middle East situation likely to drive up oil prices: analysis


CCTV+BATIE GHAR 巴铁之家):Beijing, China :

The U.S. strike that killed a senior Iranian commander has aroused wide concerns among global analysts, who are worried that the intensified situation in the Middle East might affect the international oil market in 2020.

Early on Friday, Qasem Soleimani, commander of Iran’s Islamic Revolution Guards Corps (IRGC) Quds Force, and Abu Mahdi al-Muhandis, deputy chief of Iraq’s paramilitary Hashd Shaabi forces, were killed in a strike near Baghdad airport, sparking outrage among international communities.

The oil price of West Texas Intermediate (WTI) as well as Brent Crude vaulted by 4.75 and 4.95 percent respectively in midday trading later on Friday while global stocks fell. Brent Crude oil prices also barely touched 70 U.S. dollars per barrel during trading.

Some analysts are worried that the U.S. attack might provoke serious retaliation from Iran and Iraqi-backed forces, which could lead to the possible damage of oil infrastructure in the Gulf region as well as other countries in the Middle East.

They said that if the tensions in the region continue to deteriorate, oil supplies would be severely affected, causing a surge of crude oil prices that would have major impacts on the economic and financial markets across the globe.

Meanwhile, as major producers are to implement the output reduction scheduled later this month, the oil prices might see further rises.

However, analysts pointed out that the international capacity of oil, including that of the Organization of the Petroleum Exporting Countries (OPEC) and Russia, remains over-supplied.

Other oil supplies from producers like the United States and Norway have also been increasing, and are estimated to create around 300,000 additional barrels per day during the first half of 2020.

They believe that the possible risk premium triggered by the tensions might not last for long.