Investors continued to flock to oil and gold on Monday amid the escalation of tension between the US and Iran following Donald Trump’s administration’s assassination of one of the Islamic Republic’s most powerful generals.
The oil price (CL=F; BZ=F) continued to trade upwards of 2% to $70 per barrel mark due to huge supply concerns should the tension between Iran and the US escalate. The last time oil spike to this degree was in April 2019 when it reached $74 per barrel due to the US saying that investors of Iranian oil should stop buying the commodity by 1 May or face sanctions and in September when Saudi production facilities were attacked, which erased 5% of global output.
However, Goldman Sachs (GS) said in a note that for oil to stay at this current level, there would have to be an actual disruption to supply, rather than fearful sentiment.
Meanwhile, other investors sent gold (GC=F) prices up again as it moved up 1.5% to $1,576.20 (£1,205.27) after the US airstrike on Baghdad triggered a rush to safe-haven assets.
Last week, the US assassinated Iranian general Qasem Soleimani in Baghdad — one of the country’s most powerful political chiefs and regarded as a terrorist by the US.
Iran vowed "severe revenge" and it has to “settle a score with the US.” The new head of Iran's Quds force, which Soleimani led, has pledged to remove US from the Middle East.
"We promise to continue martyr Soleimani's path with the same force ... and the only compensation for us would be to remove America from the region," said Esmail Qaani on state radio.
President Trump has since threatened severe sanctions against Iraq and said he’s prepared to strike “in a disproportionate manner” and attack more than 50 sites if Iran retaliates against the assassination.
"We have a very extraordinarily expensive air base that's there. It cost billions of dollars to build. We're not leaving unless they pay us back for it," he said.