Crude futures surge close to $2/b amid reports of airstrike in Iraq

Singapore — 0250 GMT: Crude oil futures jumped close to $2/b during mid-morning trade in Asia Friday amid growing tensions in the Middle East after an airstrike in Iraq that reportedly killed Iranian General Qassim Soleimani.

At 10:50 am Singapore time (0250 GMT), front month March ICE Brent crude futures were up $2.11/b (3.18%) from Thursday's settle at $68.36/b, while the NYMEX February light sweet crude contract was $1.84/b (3.01%) higher at $63.02/b.

According to media reports, General Qassim Soleimani, a senior Iranian official, was killed in an airstrike in Baghdad Friday morning.

"Brent oil futures are surging over 1.5% following a reported killing of Sr Iranian Commander Soleimani," AxiTrader chief Asia market strategist Stephen Innes said in a note Friday.

No one claimed immediate responsibility for the strike, which Iraqi television also said killed Abu Mehdi al-Muhandas, an Iraqi militia commander, near the Iraqi capital's airport, according to media reports.

The death of Iran's most revered military leader appeared likely to send tensions soaring between the US and Iran.

"This is more than just bloodying Iran's nose. This is an aggressive show of force and an outright provocation that could trigger another Middle East war," Innes said.

"Rising geopolitical risks will keep oil prices up, as markets remain jittery over heightened military action in the Middle East," said Benjamin Lu, investment analyst at Phillip Futures.

"Heightened militaristic actions will generate a risk premium for oil prices as traders deliberate escalating tensions in the Middle East. Oil prices look poised to trade higher as markets look towards tighter supply levels and looming geopolitical concerns," he added.

This comes at a time when crude prices were already supported by optimism from the US-China trade deal and lower crude stocks in the US.

On Tuesday, US President Donald Trump took to twitter to say the US and China would officially sign the phase one trade deal between the two countries on January 15.

Last week's US crude inventory data from the American Petroleum Institute provided further price support, analysts said.

Analyst reports quoting API data released Tuesday said US crude inventories fell 7.8 million barrels in the week to December 27.

Official data on last week's US crude inventory is due for release by the US Energy Information Administration later Friday.

As of 0250 GMT, the US Dollar Index was down 0.065 at 96.43.

--Avantika Ramesh, avantika.ramesh@spglobal.com

--Edited by Wendy Wells, wendy.wells@spglobal.com