HOUSTON, Jan. 4 (Xinhua) -- Oil prices jumped for the week ending Jan. 3 following the U.S. killing of an Iranian commander.
Qassem Soleimani, commander of Iran's Islamic Revolution Guards Corps Quds Force, and Abu Mahdi al-Muhandis, deputy chief of Iraq's paramilitary Hashd Shaabi forces, were killed in a strike near the Baghdad airport.
Sabah al-Sheikh, a professor of politics at Baghdad University, told Xinhua that the U.S.-Iranian conflict has become clear in Iraq, and there is a possibility that the conflict could spread to cover more areas in the Middle East region.
Shortly after the strike, oil prices jumped more than 3 percent, and on Friday evening, the West Texas Intermediate (WTI) for February delivery hit over 63 U.S. dollars a barrel, while Brent crude for March delivery climbed to 68.60 dollars a barrel.
Meanwhile, the U.S. Energy Information Administration (EIA) said in a report on Friday that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 11.463 million barrels during the week ending Dec. 27, 2019, much more than the market expected draw of 3.288 million barrels, which implies greater demand and is bullish for crude prices.
Oil prices surged in September 2019 when drone attacks hit Saudi Arabia's key oil facilities and forced the country to cut its crude oil output by half. Following the attacks, WTI and Brent crude jumped over 6 percent.
However, concerns over the slowing global economy outrun the worries about geopolitical challenges, which has capped the oil prices.
The U.S. dollar index closed the week slightly lower, but continued its recovery gains from six-month lows. As a response to the escalating tensions between the United States and Iran, the greenback tended to seek safe haven.
The index is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Oil is mostly traded in dollars all over the world and a stronger dollar pressures the oil demand.
For the upcoming week, some analysts believed that oil is set to move higher as investors are waiting for Iran's further responses to the U.S. targeted killing, but the downside pressure remains.
In its year-end Short-Term Energy Outlook released in December 2019, the EIA forecast that Brent spot prices would be lower on average in 2020 than in 2019 due to the forecast of rising global oil inventories.
The EIA forecast Brent spot prices would average 61 dollars per barrel in 2020, down from the 2019 average of 64 dollars per barrel, while WTI prices would average 5.50 dollars per barrel less than Brent prices in 2020.
