Oil prices spiked at the end of last week and look set to give Australian energy producers a major lift on Monday morning.
This follows the launch of an airstrike by the United States at the Baghdad International Airport which killed Iran's General Qasem Soleiman. He was the leader of a special forces unit of the Islamic Republic's elite Revolutionary Guards.
According to Bloomberg, oil prices climbed to their highest levels since April 2019 on Friday amid fears that escalating geopolitical tensions could disrupt Middle East crude supplies. The WTI crude oil price rose 3.1% to US$63.05 a barrel and the Brent crude oil price stormed 3.6% higher to US$68.60 a barrel.
This looks set to send the shares of energy producers such as Beach Energy Ltd (ASX: BPT), Oil Search Limited (ASX: OSH), Santos Ltd (ASX: STO), and Woodside Petroleum Limited (ASX: WPL) higher later this morning.
Where next for oil prices?
If the situation continues to escalate, then experts believe oil prices could push notably higher from here.
According to CNBC, analysts at political risk consultancy Eurasia Group believe Iran will retaliate to this airstrike and cause further spikes in the oil price.
It said: "We expect moderate to low-level clashes to last for at least a month and likely be confined to Iraq. Iranian-backed militias will attack U.S. bases and some U.S. soldiers will be killed; the U.S. will retaliate with strikes inside of Iraq."
It expects oil prices to hold at around US$70 a barrel, "but could make a run at US$80 if the conflict spreads to the oil fields of southern Iraq or if Iranian harassment of commercial shipping intensifies," it added.
Gold price jumps.
It isn't just oil prices jumping on the news. Increasing demand for safe haven assets has sent the gold price hurtling higher as well.
On Friday the spot gold price pushed a further 1.6% higher to US$1,552.40 an ounce, much to the delight of the shareholders of Newcrest Mining Limited (ASX: NCM), Resolute Mining Limited (ASX: RSG), and the rest of the gold miners.
