Oil Surges Above $70 a Barrel as Asian Markets Digest Iran News

323
Robert Hubbard filling his tank at a Berkeley, Calif., service station on Monday, Sept. 16, 2019. A prolonged surge in gasoline prices after the attacks on oil production facilities in Saudi Arabia could undermine that phenomenon and increase the risk of a recession. (Jim Wilson/The New York Times)

Alexandra Stevenson

c.2020 The New York Times Company

 

HONG KONG — Oil prices surged and stock markets in Asia fell on Monday morning, as the effect of the American killing of a powerful Iranian general on Friday ricocheted around the world.

The price of Brent oil, the international bench mark, jumped above $70 in futures trading as markets digested a steady flow of news over the weekend. Investors showed nervousness as Iran pledged to retaliate for the killing of Qassem Soleimani, the Iranian general. President Donald Trump raised the specter of additional strikes on Iranian cultural sites if it did so.

The State Department warned of a “heightened risk” of a missile attack near U.S. military bases. Iran later said it would abandon a nuclear agreement and Iraq vowed to expel U.S. troops from the country.

The sudden escalation in tensions in a region that supplies much of the world’s petroleum has roiled oil markets. The West Texas Intermediate, the American oil bench mark, rose 1.9% to $64.22 a barrel in futures trading.

Analysts at Capital Economics have warned that the price of oil could spike to $150 a barrel if the bellicose rhetoric between the two countries turned into action.

“The price of oil would soar in the event of full-blown military conflict in the Middle East,” said Alexander Kozul-Wright, a commodities economist at Capital Economics.

“However,” he added, “this rally would probably be short-lived as supply networks would adjust and demand would slump in the wake of higher prices.”

Stocks fell in financial capitals across Asia. In Tokyo, shares fell by more than 2% in morning trading, while major stock markets in Hong Kong, Taipei and Seoul inched down about 1%.

The price of gold, considered a safe haven investment, reached its highest level since April 2013. The spot price of bullion hit $1,588.13 an ounce, up more than 2%, in early trading before coming down slightly.