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Oil prices jump to highest level in four months after Iran attack

Gold prices soars amid current geopolitical tensions

People pass by a stock board at the Abu Dhabi Stock Market, in Abu Dhabi, United Arab Emirates on Jan 8. (AP)

KUWAIT CITY, Jan 8, (KUNA): Oil prices jumped Wednesday to the highest level in four months, reaching $71.75 per barrel (pb) for Brent crude, following the Iranian attack on Iraq’s Ain Al-Asad air base.

The air base includes American soldiers in Iraq, which raised fears of an escalating conflict and disruption of oil supplies. Brent crude futures rose $1.83, by 2.7 percent, to reach $70.10 pb, after rising earlier in the session to $71.75, reaching its highest level since last mid-September.

West Texas Intermediate also rose about two dollars, nearly three percent, recording $64.30 pb, where earlier it touched $65.85, its highest price since last April. In this regard, oil expert, Abdulhameed Al-Awadi, told KUNA that the recent tensions in the Middle East have a direct refl ection on oil prices, due to region’s sensitivity and its containment of the largest oil reserves in the world.

The region exports approximately 18 million barrels of oil per day, he said. Some 50 to 60 oil tankers enter the Gulf region daily, he said, noting that the daily oil prices fl uctuate according to the geopolitical conditions and tensions in the region. Oil prices have been rising since the beginning of tension between Washington and Tehran following US withdrawal from the Iranian nuclear agreement in May 2018, as well as two-missile attack on Saudi Aramco, in addition to the Iranian attack on two oil tankers in the Gulf of Oman, he added.

The prices jumped three dollars this week after the killing Commander of the Iranian Islamic Revolutionary Guard Corps’ Quds Force Qassem Soleimani, in an action adopted by the Pentagon, following escalation of fears of Iranian reactions, Al-Awadi said. The Iranian response to the killing of Soleimani came early Wednesday, by an attack on Iraq’s Ain Al-Asad air base, as oil prices jumped after the attack to USD 70 pb, then came back down due to large amount availability of American oil in the market in addition to most countries took their precautions of crises times. China, Japan and South Korea have reserves of 1.2 billion barrels covering their needs for about three weeks, he noted.

Al-Awadi said that the decision of the Organization of Petroleum Exporting Countries (OPEC) to reduce production by 500 thousand barrels per day starting from the beginning of January this year had a role in the relatively high oil prices. Oil prices expected to rotate between $75-80 in case tension increased and Washington’s response to the Iranian attack on the air base, he added. Iran announced today bombing of Ain Al-Asad air base, which includes American soldiers in Iraq, in response to the killing of Qassem Soleimani.

Iranian state television said that the Revolutionary Guards bombed the air base with missiles, warning the United States against any further movement or aggression. In the same context, Iraqi media have confirmed targeting the air base in Anbar Province with nine ballistic missiles, without revealing the size of the losses caused. In turn, US President Donald Trump it a tweet posted on his official account on Twitter following the attack stressed that “all is well”, and “assessment of causalities and damages taking place now. Gold prices have jumped to unprecedented levels since seven years ago, trading at $1,611 per ounce due to current geopolitical jitters in the Middle East.

In spot deals, the gold ounce rate rose on Wednesday by 0.8 percent, equivalent to $11, standing at $1,611 per ounce, the highest level since April 2013. Rajab Hamed, a specialist in precious metals at Kuwait Sabaek Company, told KUNA that mounting regional tension would boost traders’ trend to seek safe refuge, namely the yellow metal. Gold is widely regarded as a substitute option in gloomy political and financial conditions, he said, adding that the gold price would reach $1,700 per ounce in the shadow of the regional political jitters.

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