Oil prices soared more than four percent Friday and equities reversed early gains following news that the US had killed a top Iranian general, fanning fresh fears of a conflict in the crude-rich region.

The head of Iran’s Quds Force, Qasem Soleimani, was hit in an attack on Baghdad’s international airport early Friday, according to Hased, a powerful Iraqi paramilitary force linked to Tehran.

Later, Donald Trump tweeted a picture of the American flag, and the Pentagon said he had ordered Soleimani’s killing.
Brent surged 4.4 percent to $69.16 and WTI jumped 4.3 percent to $63.84 as investors grow increasingly worried about a possible flare-up in the tinderbox Middle East.

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

The killing of Soleimani is a dramatic escalation of tensions between the US and Iran and comes after a pro-Iran mob this week laid siege to the US embassy in Iraq following deadly American air strikes on the hardline Hashed faction.

Analysts warned that Iran would interpret the strike as an act of war. Iran’s supreme leader, Ayatollah Ali Khamenei, pledged “harsh retaliation,” according to Iran’s state news media. These developments raised the prospect of volatility in Iran and Iraq, two major oil producers.

Iran said on Sunday it no longer considers itself bound by the 2015 nuclear deal negotiated with the US and other world powers in the fallout from the killing of Soleimani. It added that it has to “settle a score with the US”.

Iraq’s Parliament on Sunday recommended all foreign troops be ordered out of the country after the U.S. killing of a top Iranian military commander and an Iraqi militia leader in a drone strike on a convoy at Baghdad airport.

Meanwhile, the spot gold price rose to its highest in almost seven years as concerns over geopolitical tensions in the Middle East stoked demand for precious metals, which are seen as safer investments during times of financial uncertainty.

Spot gold gained 1.6% to $1,579.55 per ounce in jittery trade to reach its highest since April 2013.

Oil prices extended gains on fears any Middle East conflict could disrupt global supplies.

Brent crude futures rose $1.9 to $70.50 a barrel, while U.S. crude climbed $1.5 to $64.57.

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