Oil price rises over 4% after US air strike kills top Iranian military commander

Brent crude oil price spiked over 4% today after US airstrikes in Iraq killed a top Iranian commander, heightening geopolitical tensions. Brent crude oil price rose up to $69.16 per barrel marking a spike of 4.39% its highest level since September against previous close of $66.25 per barrel. The effect of rise in oil prices was felt at home today after oil marketing companies hiked price of petrol by 10 paise and that of diesel by 15 paise a litre.

In Delhi, a litre of petrol today costs  Rs 75.35 and diesel  Rs 68.25 per litre. Now, petrol costs Rs 80.94 a litre and diesel Rs 71.56 a litre in Mumbai.

Since domestic fuel prices are directly dependent on international crude oil prices, petrol and diesel prices are likely to jump sharply in the next few days over increasing tensions in the oil-rich Middle East countries.

US forces killed Gen Qassem Soleimani, the head of Iran's elite Quds Force, at Baghdad airport. The US airstrike also killed top Iraqi militia commander Abu Mahdi al-Muhandis, Pentagon said today.

"The supply side risks remain elevated in the Middle East and we could see tensions continue to elevate between the US and Iran-backed militia in Iraq," said Edward Moya, analyst at brokerage OANDA, in an e-mail to news agency Reuters.

Oil prices also rose after China's central bank on Wednesday said it was cutting the amount of cash that banks must hold in reserve, releasing around 800 billion yuan ($115 billion) in funds to shore up the slowing Chinese economy.

Also read: US Airstrikes at Baghdad Airport Updates: Trump ordered 'killing' of top Iranian commander Qassem Soleimani

Meanwhile, Asian stocks were trading mixed. Benchmarks in Shanghai and Hong Kong declined. Australia and some Southeast Asian markets advanced. Japanese markets were closed. Overnight, Wall Street rose to new records, boosted by technology stocks. Investors were encouraged by expectations of stronger global economic growth in 2020 and the planned signing of an interim US-Chinese trade agreement.

On Wall Street, the benchmark S&P 500 index climbed 0.8% to 3,257.85. The Dow Jones Industrial Average rose 1.2% to 28,868.80. The Nasdaq composite gained 1.3% to 9,092.19.

(With inputs from agencies)