The price of oil surged Friday on concerns Iran might respond to the killing of its top general by the United States by disrupting global supplies of energy from the Middle East.

News that Gen. Qassem Soleimani, head of Iran's elite Quds Force, was killed in an air attack at Baghdad International Airport prompted expectations of Iranian retaliation against U.S. and Israeli targets.

Amid past flare-ups with the U.S., Iran threatened the supply of oil that travels from the Persian Gulf to the rest of the world. About 20 per cent of oil traded worldwide goes through the Strait of Hormuz, where the shipping lane is only three kilometres wide and tankers have come under attack this year.

The international benchmark for crude oil jumped 4.5 per cent, or $2.98 US, to $69.23 a barrel in London trading. The U.S. contract was up 4.3 per cent, or $2.60, to $63.78.

The higher oil price in the wake of the U.S. airstrike was driving up share prices for Canadian energy companies and threatening higher fuel prices for consumers in Canada.

Canadian oil and gas stocks climbed on the Toronto Stock Exchange, led by oilsands producers MEG Energy Corp. and Canadian Natural Resources Ltd.

Randy Ollenberger, managing director of oil and gas equity research at BMO Capital Markets, says there are fears that an escalation in conflict could affect Saudi Arabian output or lead to problems with oil shipments through the region.

"We saw $80 [for Brent crude oil] last time with a relatively brief outage," he said.

"If Iran made a more concerted action to disrupt global production, you'd be looking at prices higher than that, in which case you'd certainly see an even bigger move in Canadian equities."

'Revenge will come': analyst

"Revenge will come, maybe not overnight, but it will come, and until then we need to increase the geopolitical risk premium," said Olivier Jakob, head of consultancy Petromatrix, in a note to investors.

He noted Iran's response may not be limited to the Strait of Hormuz.

In September, Yemen's Iran-backed Houthi rebels launched drone attacks on the world's largest oil processing facility in Saudi Arabia. The strike briefly took out about half of the supplies from the world's largest oil exporter. The U.S. directly blamed Iran, which denied involvement.

The U.S. killing of Iranian Gen. Qassem Soleimani, pictured in 2016, sparked international alarm and reaction ranging from condemnation to calls for restraint on all sides. (Ebrahim Noroozi/The Associated Press)

Launching attacks that can't be easily linked back to Iran limits the chances of direct retaliation.

However, Iran has also directly targeted tankers. This year, it seized a British-flagged tanker the Stena Impero for several weeks. And it has shot down a U.S. military drone.

About 80 per cent of the crude oil that travels through the Strait of Hormuz goes to countries in Asia, including China, Japan, India and South Korea.

But the rise in the global price of oil will have a wider effect, particularly in oil-importing countries with big manufacturing sectors like Germany and Italy. Those countries fared worst in the stock market on Friday, with their main indexes falling 1.4 per cent and 1.1 per cent, respectively.

The economic damage could be limited given that the energy market is flush with oil while the growth in demand has softened as major economies have slowed. And crude-producing countries, particularly the Unites States, have been pumping oil at a high rate.

A satellite image shows thick black smoke rising from Saudi Aramco's Abqaiq oil processing facility in Buqyaq, Saudi Arabia. The September attack on the facility caused the worst disruption to world supplies on record. (Planet Labs/The Associated Press)

The Organization of the Petroleum Exporting Countries (OPEC) group and key ally Russia agreed last month to cut their oil production, but many countries have been pumping above their limits.

That has kept the price of oil in check. On Friday, the Brent benchmark rose to its highest since May after largely hovering around $60 a barrel.

A gradual rise in renewable energy production could also limit the economic damage from a jump in crude prices. But experts note fossil fuels like oil continue to provide the vast majority of energy that drives industry, transportation and heating, among other things.