Global oil markets received a shock overnight, after the United States confirmed that an airstrike had killed Iranian General Qassem Soleimani, the country’s top military commander. Soleimani was a top commander in Iran’s infamous Revolutionary Guard and seen as the second most powerful person in Iran. The strike has effectively ushered in a new era of Middle East tension, as Iran vows “harsh retaliation.”
Crude oil futures soared to a high of 3.50% to $63.31 shortly after the news broke, as U.S. stock indices sold off. Through mid-day trading on Friday, January 3, 2020, the Dow Jones is leading indices lower, down over 0.50%. Experts believe that oil market volatility could be set to continue for the next many weeks, as we await the Iranian response and potential full-blown escalation to war.
Airstrike Comes After Recent U.S. Embassy Assault in Iraq
The Pentagon released a statement Thursday night noting that the strike was “ordered directly by U.S. President Donald Trump,” according to major news outlets like Yahoo. President Trump has previously stated on Twitter that appropriate action would be taken after the U.S. Embassy in Iraq came under attack from Iranian-back militias.

“The United States will continue to take all necessary action to protect our people and our interests wherever they are around the world,” noted the U.S. government in a statement. The U.S. ordered American citizens to leave the U.S. Embassy in Iraq immediately “due to heightened tensions in Iraq and the region.”
Investors Flee to Gold, Treasuries
With New Years’ trading plans effectively scrapped, investors sold off risky assets and piled into safe havens like Treasuries and gold. As a result, gold prices jumped as high as 1.30% to $1,547 per ounce and the 10-year Treasury saw its yield drop to 1.83%, as prices rose.
The energy sector was the only bright spot in the equity markets, as commodity spot prices rose in reaction to the airstrike. However, after rising over 1% in early trading, the Energy Sector SPDR ETF is now down 0.59% in afternoon trading. This further highlights the flight to safety as uncertainty continues to dominate.
“Global oil markets will be volatile for weeks to come. There’s a reason, finally, for caution in the stock market,” noted Greg Valliere, chief U.S. policy strategist at AGF Investments.