Baku, Azerbaijan, Jan.3
By Leman Zeynalova – Trend:
Murder of General Qassem Soleimani, the head of Iran's elite Islamic Revolutionary Guard Corps (IRGC) as a result of the US air raid in Baghdad, coupled with other geopolitical problems, may lead of a 10-15 percent increase in oil prices, Dr. Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS) told Trend.
General Qassem Soleimani, the head of Iran's elite Islamic Revolutionary Guard Corps (IRGC) was killed near the Iraqi capital Baghdad as a result of an attack by US helicopters on Jan.3. The IRGC has have confirmed Soleimani's death.
Oil prices jumped more than 4 percent on Jan.3, raising concerns that escalating Middle East tensions may disrupt oil supplies.
Brent crude futures were up by nearly $3 at $69.16 per barrel, their highest since September 17, as markets feared Iran could retaliate against the killing of its top militiamen by attacking assets of the US and their allies in the Middle East.
"This is obviously a hugely destabilizing move which could open the gates of hell in the Middle East. Iran will definitely retaliate in one way or another, probably against Israel or Saudi Arabia, via its proxies. All of this is coming at a time US financial markets are at all time high and investors are likely to run for the exits, pushing oil prices up. Iran’s reaction may take some time to materialize and this could lead to several weeks of high alert in the oil market,” said the expert.
Luft believes that the forthcoming US-China trade deal will add additional upward pressure on crude prices as the two countries will be gearing toward more voluminous bilateral trade.
“To top it off additional quantitative easing by the Fed might weaken the dollar, adding even more upward pressure on crude prices. All of this point to a 10-15 percent increase in price in the first quarter of 2020 and this is under the scenario of no major military escalation in the Gulf,” the expert added.
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