Oil prices jump after Iran strike on US military bases in Iraq
Jan. 08, 2020
Oil prices have surged after Iran carried out a missile attack on two US military bases in Iraq, ramping up fears of a war between the two nations.
Iran claimed responsibility for the rockets in the country's first retaliation since President Donald Trump sanctioned a drone strike killing its top general Qasem Soleimani .
Ballistic missiles hit Ain al Assad base and were also fired at a military base in Erbil, in the Kurdish region of Iraq . It is unclear what casualties or damage has been caused by the coordinated strikes executed under the name Operation Martyr Soleimani.
The oil market responded immediately with European and US benchmark prices increasing by as much as four per cent.
The price of Brent crude burst above $70 mark.
Both Brent and another blend West Texas Intermediate drew back slightly in the hours after the attack, but stayed more than one per cent higher than Tuesday's price.
Gold and Japanese yen, often referred to as safe haven assets because they maintain for the most part their value, also rose on the news.
Stock market prices in comparison dipped across Asia with the Austral because of growing fears about a conflict in the Middle East.
However, they mostly recovered as Iranian officials played down the possibility of further attacks.
The increase added to oil prices already elevated by a market made nervous by the US assassination of general Soleimani on Friday.
Missiles were deployed just hours after Soleimani's funeral with international communities on edge over the prospect of an all-out war between Iran and the United States .
Iran's president told the US on Wednesday that Washington might have "cut off the arm" of General Qassem Soleimani but America's "leg" in the region would be cut off in response, Iran's state Fars news agency reported.
President Hassan Rouhani made his comments after Iran launched missile strikes on US targets in Iraq, an action that Tehran said was in retaliation to a U.S. drone strike that killed Soleimani last week.
If there is a conflict, it could disrupt the shipping routes in the Strait of Hormuz, the world's busiest oil route and an essential passage for oil exporters in the Gulf including, Saudi Arabia, Iraq, the UAE, and Kuwait.
Iran also relied on the route for its oil exports and Qatar exports nearly all its gas through the strait. Qatar is the world's biggest producer of liquefied natural gas (LNG).
Foreign Secretary Dominic Raab sent British naval ships to the Gulf shortly after Soleimani's death to escort merchant ships sailing under the UK flag.
American airlines have been banned by its own regulator from flying over Iraq, Iran and its neighbouring countries, including the Gulf of Oman and the surrounding waters.
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