Trump said he\u2019s prepared to strike \u201cin a disproportionate manner\u201d and attack more than 50 sites if Tehran retaliates against the killing of General Qassem Soleimani.<\/p>\n
The Middle East nation said it has to \u201csettle a score with the US\u201d and that it would no longer\u00a0abide by limits on its enrichment of uranium. A vote by Iraq\u2019s parliament to expel U.S. troops from the country deepened the fallout.<\/p>\n
Brent futures rose as much as $2.14, or 3.1%, to $70.74 on ICE Futures Europe and were at $69.55 at 10:32 a.m. in London. The contract surged 3.6% on Friday. West Texas Intermediate advanced 1.2% to $63.78 on the New York Mercantile Exchange.<\/p>\n
The political tension is buffeting a market that had already been tightening, in large part because of production cuts by the OPEC cartel and its allies. The premium for immediate Brent futures compared with those seven months ahead more than doubled in the fourth quarter.<\/p>\n
Saudi Arabia, Iran and Iraq together pumped more than 16 million barrels of oil a day last month. Most of their exports leave the Persian Gulf through the Strait of Hormuz, a narrow waterway that Iran has repeatedly threatened to shut down if there\u2019s a war.<\/p>\n
The U.S. said there\u2019s a risk of attacks particularly in the eastern province of Saudi Arabia and near the Yemeni border, close to military bases as well as oil and gas facilities, the State Department said in a tweet. The president is also sending\u00a0more troops\u00a0to the Middle East.<\/p>\n
Rising tensions between the U.S and Iran have already caused considerable turbulence in oil markets, but so far it\u2019s been short-lived.<\/p>\n
Last year, Washington blamed Tehran for sabotage attacks on supertankers and a missile and drone attack on Saudi Arabia\u2019s Abqaiq crude-processing plant in September – the largest single supply halt in the industry\u2019s history. Iran denied involvement.<\/p>\n
Beyond crude\u2019s rise, there were other signals in the market that people were preparing for further disruption.<\/p>\n
Volatility has risen to its highest level in a month and the cost of derivatives that insure against price spikes increased.<\/p>\n
Four million barrels of options contracts that would profit from a jump in Brent crude to $95 a barrel traded for both March and September. The cost of insuring tankers could rise again, after it surged in the wake of the Abqaiq attack in September.<\/p>\n
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