Oil prices rose a further two per cent on Monday, pushing Brent above 70 dollars a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after a US air strike which killed a top Iranian military commander.

Meanwhile, the Federal Government maintained a benchmark of 60 dollars per barrel in Nigeria’s 2020 budget.

Brent crude futures LCOc1 soared to a high of 70.74 dollars a barrel and was at 69.74 dollars at 0940 GMT, up 1.14 dollars, or 1.66 per cent, from Friday’s settlement.

U.S. West Texas Intermediate CLc1 crude was at 63.92 dollars a barrel, up 87 cents, or 1.38 per cent after touching 64.72 dollars the highest since April.

The gains extended Friday’s more than 3 per cent surge after a U.S. air strike in Iraq killed Iranian military commander Qassem Soleimani on Friday, heightening concerns about an escalation in conflict in the Middle East and the possible impact on oil supplies.

The region accounts for nearly half of the world’s oil production, while a fifth of the world’s oil shipments pass through the Strait of Hormuz.

On Sunday US President Donald Trump threatened to impose sanctions on Iraq, the second largest producer among the Organisation of the Petroleum Exporting Countries (OPEC), if U.S. troops were forced to withdraw from the country.

Baghdad earlier called on U.S. and other foreign troops to leave Iraq.

Trump also said that the United States would retaliate against Iran if Tehran were to strike back after the killing.

“The situation brings lots of uncertainty and geopolitical tea-leaf reading on reactions. While the closure of the Strait of Hormuz remains a very unlikely event, the deterioration in Iraq bears supply risks,” said Norbert Rucker, head of economics at Swiss bank Julius Baer.

“Geopolitics tend to be a temporary force on oil markets and we believe this time is no different. We raise our near-term forecast to 65 dollars per barrel, and maintain a neutral view”.

Goldman Sachs analysts said the current risk premium embedded in Brent monthly price spreads is already elevated and an actual supply disruption is now necessary to sustain current oil prices.

“The precedent set by the Abqaiq attack (on Saudi oil facilities in September 2019) showed that the oil market has significant supply flexibility starting when Brent is at 70 dollars a barrel, even before shale production needs to ramp up, suggesting only moderate upside from here, should an attack on oil assets actually occur,” the bank said.

In the United States, U.S. crude stocks fell by their most since June as exports exceeded 4 million barrels per day for the first time in history, the Energy Information Administration said on Friday.

Elsewhere, bad weather shut all four oil export terminals in eastern Libya on Sunday and the closure could last three days, port sources said.