An employee works on at the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz, Mexico. Picture: REUTERS
An employee works on at the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz, Mexico. Picture: REUTERS

Singapore — Brent crude futures jumped close to $3 on Friday to their highest since September after a US air strike killed senior Iranian and Iraqi military personnel, raising concern that escalating Middle East tension may disrupt oil supplies.

Brent crude futures jumped nearly $3 to hit a high of $69.16 a barrel, the highest since September 17. The front-month Brent March contract was at $68.25 a barrel, up $2.00, or 3%, by 2.58am GMT.

US West Texas Intermediate (WTI) crude futures rose $1.76, or 2.9%, to $62.94 a barrel. Earlier, it touched $63.84 a barrel, highest since May 1.

“The supply-side risks remain elevated in the Middle East and we could see tensions continue to elevate between the US and Iran-backed militia in Iraq,” said Edward Moya, analyst at brokerage Oanda, in an e-mail to Reuters.

An air strike at the Baghdad International Airport early on Friday killed Iranian major-general, Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, an Iraqi militia spokesperson told Reuters.

The Pentagon later confirmed it was a US air strike that killed Soleimani.

Oil prices were also lifted by China’s central bank saying on Wednesday it was cutting the amount of cash that banks must hold in reserve, releasing about 800-billion yuan ($115bn) in funds to shore up the slowing Chinese economy.

This came shortly after data showed China’s production continued to grow at a solid pace and business confidence shot up.

“Oil prices still have room for further upside as many analysts are still having to upgrade their demand forecasts to include a rather calm period on the trade front,” Moya said, referring to the warming trade relations between China and the US.

“President Trump is likely to take a break on being ‘tariff man’ until we get beyond the presidential election in November.” 

Reuters

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