Oil prices rose more than $3 on Friday after a US air strike at a Baghdad airport ordered by President Donald Trump killed the head of Iran’s elite Quds Force.
The US air strike killed Major-General Qassem Soleimani, an important figure to many Shi’ites and Iranians.
Brent crude rose to a peak of $69.50 a barrel, its highest since September.
The attack raised concerns about a serious escalation of regional tensions and a possible disruption to crude oil supplies.
Iran’s Supreme Leader Ayatollah Ali Khamenei warned that revenge awaited the “criminals” who killed Soleimani.
Political risk consultancy Eurasia Group’s Iran analyst Henry Rome told Reuters: “We expect moderate to low-level clashes to last for at least a month and likely be confined to Iraq.
“Iran will also likely resume harassment of commercial shipping in the Gulf, and may launch military exercises to temporarily disrupt shipping.”