International Oil Prices Surge After Death of Influential Iranian Military Figure in US Airstrike

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] News that Qasem Soleimani, commander of the elite Quds Force of Iran's Islamic Revolutionary Guard Corps, was killed in a U.S. airstrike on the 2nd (local time) has caused international oil prices to surge.

As of 1:14 PM on the 3rd (Korea time), March delivery Brent crude oil is trading at $68.18 per barrel. This marks an increase of nearly 3% compared to the previous trading day. Brent crude prices surged more than 4% intraday before stabilizing somewhat. February delivery West Texas Intermediate (WTI) crude oil closed at $61.18 per barrel on the New York Mercantile Exchange on the 2nd, up 0.2% from the previous trading day.

The reason for the sharp rise in oil prices is that Soleimani, a powerful military figure in Iran, was killed in a U.S. airstrike in Baghdad, Iraq. As the U.S. and Iran were already in a tense conflict, the killing of this military figure has increased the likelihood of armed conflict between the two countries, which is impacting oil prices.

The U.S. Department of Defense announced that under the direction of President Donald Trump, U.S. forces killed Commander Soleimani. After reports of Soleimani’s death, President Trump posted an American flag emoji on his Twitter account without further explanation, effectively acknowledging the event.

Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, told CNBC, "This incident will push us to the brink of a full-scale firefight, not just a shadow war or proxy war." Matthew Bay, Senior Global Analyst at Stratfor, a U.S. foreign affairs and security firm, predicted that there will be massive retaliation from Iran as a result of this incident.

The U.S. has attributed the ongoing two-month bombardment of U.S. military facilities and the recent attack by protesters on the U.S. embassy in Iraq to pro-Iranian Shiite militias. In particular, Iran is identified as effectively commanding these Shiite militias, pushing U.S.-Iran relations to a critical and volatile point.