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US drone strike kills Iran's General Qassem Suleimani

By Elena Berton

Crude oil prices rocket and futures drop after attack at Baghdad airport

Oil prices soared to nearly $70 a barrel after a US airstrike ordered by President Donald Trump killed a top Iranian general in Iraq.

While there was no impact on oil production, the killing of one of Iran’s most powerful generals will inflame tension between Washington and Tehran, prompting fears of a conflict that could pull in other countries.

The global benchmark Brent crude and the West Texas Intermediate crude each surged immediately after the news. They were trading up 3.56 per cent at $68.42 (€61.36, £52.24) and up 3.5 per cent at $63.08 respectively in mid-morning trade.

Iranian Major-General Qassem Suleimani, head of the elite Quds Force (above), and Abu Mahdi al-Muhandis, a top commander of Iran-backed militias in Iraq, were both killed in a US air strike on their convoy at Baghdad airport, prompting Iran to vow retaliation.

In a tweet, Iran's Foreign Minister Javad Zarif called the US strike an "act of international terrorism," adding that it was an "extremely dangerous and foolish escalation”. He said the US bore responsibility for all consequences of its "rogue adventurism”.

Iranian President Hassan Rouhani said in a statement that his country would take revenge for the killing of Suleimani, who had the title of Major General in the Islamic Revolutionary Guard Corps. Since 1998, Suleimani had been a commander of its Quds Force, a division mainly responsible for extraterritorial military and clandestine operations.

Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, wrote in a research note: "An indirect response is the most apparent course of action, and oil installations and tankers were my first thoughts.” He added that it was difficult to tell whether the price surge will be sustained.

Stephen Innes, chief Asia market strategist for AxiTrader, wrote: “This is an aggressive show of force and an outright provocation that could trigger another Middle East war. Indeed we are waking up to a less safe world than it was only hours ago.”

The US strikes in Iraq and recent dollar weakness combined to boost the value of gold, driving the precious metal 0.84 per cent higher on the spot market.

FURTHER READING Iran proposes Islamic crypto to challenge US dominance

FURTHER READING Trump hits Brazil and Argentina with new steel and aluminium tariffs

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