Oil prices rise amid geopolitical tension

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A staff member refuels a car at a filling station in Hai'an, east China's Jiangsu Provicne, on Nov. 16, 2018. [Photo/Xinhua]

Oil prices continued to rise on Monday after the U.S. military killed a senior Iranian commander, sparking concerns that the heightened Middle East tensions could disrupt energy productions in the region.

The West Texas Intermediate for February delivery rose 0.22 U.S. dollar to settle at 63.27 dollars a barrel on the New York Mercantile Exchange. Brent crude for March delivery increased 0.31 dollar to close at 68.91 dollars a barrel on the London ICE Futures Exchange.

The international benchmark Brent crude topped 70 dollars a barrel earlier in the session, reaching a more than three-month high.

The United States killed Major General Qassem Soleimani, commander of Iran's Islamic Revolution Guards Corps Quds Force, in an airstrike in Baghdad on Friday, escalating tensions in the Middle East.

Market participants feared that the rising Middle East tensions could impact energy production in the oil-rich region, which accounts for almost one third of global oil supply, analysts said.

But analysts also noted that despite the geopolitical tension, spare capacity in oil may remain adequate.

"We still expect an oversupplied oil market this year due to non-OPEC supply growth outpacing modest oil demand growth," UBS Global Wealth Management's chief investment officer Mark Haefele and his team said in a note on Monday.

While oil prices are likely to build in a larger risk premium amid heightened political tensions, Brent prices will struggle to hold above 70 dollars a barrel in the first half of 2020, UBS analysts said.

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