Oil prices have surged on fears of Iranian retaliation against the United States after Gen. Qassem Soleimani, head of Iran's elite Quds Force, was killed in an air attack at the Baghdad International Airport.
The international benchmark for crude oil jumped 3.7 percent, or $2.45, to $68.70 a barrel in London trading on Friday. The U.S. contract was up 3.6 percent, or $2.18, to $63.36.
"Revenge will come, maybe not overnight, but it will come and until then we need to increase the geopolitical risk premium," Olivier Jakob, head of consultancy Petromatrix, said in a note to investors.
While Friday's price increase was significant, it was still short of the 14 percent surge seen on Sept. 16, when Yemen's Iran-backed Houthi attacked the world's largest oil processing facility in Saudi Arabia, the Associated Press reported. That strike briefly took out about half of the supplies from the world's largest oil exporter.
Oil installations and crude shipments have been increasingly targeted in recent months amid rising tensions in the Middle East. About a fifth of the global oil supply flows through the Strait of Hormuz, a narrow shipping route between Oman and Iran.
Iran seized two oil tankers – one registered in the United Kingdom, the other in Liberia – passing through the strait last July.
In the U.S., crude oil accounts for just over 50 percent of the price of gasoline, according to the U.S. Energy Information Administration.
"In the longer term, the rise in crude oil prices could be limited by the fact that the energy market is flush with oil while demand has softened as major economies have slowed," the Associated Press reported on Friday. "Crude-producing countries — particularly the United States — have been pumping oil at a high rate."
Secretary of State Mike Pompeo told CNN that President Trump's decision to "remove" General Suleimani pre-empted a "big action" Iran was plotting that would have put American lives at risk.
President Trump deserves credit for removing a truly bad man from the regional scene. But with the move, there may be economic repercussions that follow.