The price of oil has now jumped and is on its way to $70, in the wake of a recent U.S. airstrike on a top general from Iran. Authorized by President Donald Trump, the airstrike targeted and killed General Qassem Soleimani. The general was the leader of the Revolutionary Guards’ Quds force.
In response to the development, brent futures jumped over 4% even as tensions began to heighten.
According to a report from the Pentagon, Soleimani was killed because he was “actively developing plans to attack American diplomats and service members in Iraq and throughout the region.” The popular General’s convoy blew up in Baghdad, Iraq, on his way to the airport.
The Pentagon describes the move as a preventive measure, adding that the lives of U.S. citizens will always come first.
“This strike was aimed at deterring future Iranian attack plans. The United States will continue to take all necessary action to protect our people and our interests wherever they are around the world.”
Oil Price and U.S Tension With Iran
In many parts of the world, the air is a bit tense. The killing of Iran’s top general is a very significant development, one that will likely end with some reprisal. Ayatollah Ali Khamenei, the Supreme Leader of Iran, has already declared that Iran will ensure Soleimni’s killers are met with “severe retaliation.” There are also quite a lot of people all over the world, who seem to expect the worst.
According to Columbia University official and a former member of the Obama administration, Iran will respond. Bordoff said:
“This is a seismic event in the region. This is how U.S.-Iran tit-for-tat spirals out of control. Iran’s response will be severe and deadly. And certainly may include escalating attacks on energy infrastructure.”
Some analysts were a bit more specific. Political risk consultants with the Eurasia Group in a recent note are sure that “Iran will respond.” They went a bit further:
“We expect moderate to low-level clashes to last for at least a month and likely be confined to Iraq. Iranian-backed militias will attack U.S. bases and some U.S. soldiers will be killed; the U.S. will retaliate with strikes inside of Iraq.”
While the tensions are building, there’s oddly a positive side. On Friday morning, the International benchmark brent price hit an intraday high of $69.16. Although it later dropped, the analysts believe that the price will stay around $70 for a while. The clincher, however, is a possible increase. Eurasia’s analysts predict that if the conflict intensifies, an $80 price is possible. This just might be a better oil price response to the Iran tension.
Iran also has plans for its own cryptocurrency, to go around U.S. sanctions.
Does This Mean War?
All over social media, people say they expect the situation to escalate into a full-blown world war. While this might be a bit of an exaggeration, many believe that the airstrike was a bad idea.
Earlier this week, there was an attack on the American embassy in Baghdad. Some think that this, among other things, prompted the U.S. to take action. Furthermore, Qassem Soleimani has a bit of an infamous reputation as an attack mastermind. Regardless, there is a general fear that things are about to get really bad.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.