Tensions in West Asia escalate following the killing of a top Iranian commander in the Baghdad attack by the US. Iran said they would avenge the killing. As a result of these tensions, crude prices spiked to 3-month highs.

Talking about these escalating tensions Kang Wu, head of analytics-Asia at S&P Global Platts said, “We are watching the geopolitical risks as we always do and it is very high in Middle East.”

“The short-term events like this will certainly effect the market. However, if you look at a bit longer term - say in weeks and months, the overall supply of oil is not overly affected. People always react to this kind of short-term effect, but Iran has been down to minimum in terms of exports. Their own action against the exports is not effective for the past months,” he added.

He said crude prices are already elevated to the point that we have probably seeing the peak of the price already. “Going into January-February, the Q1, actually we are entering into a little bit lower demand globally and so there is a bit of a downward pressure. The political risk will keep up the pressure. However, fundamentally in the first quarter, we see a bit of easing of the market although in second quarter when driving season comes things will be different again. We are seeing another possible price spike in Q2,” Wu said, adding that as always political risk is on the bullish side of the prices.

First Published:Jan 3, 2020 3:50 PM IST