Oil rally cools as Iranian strike causes no US casualties
Singapore - Oil’s rally faded as the US said Iranian airstrikes on military bases in Iraq didn’t cause any casualties, reinforcing speculation that Tehran is opting for limited retaliation over the killing of a top general.
On Wednesday, futures in London initially surged more than 5 per cent as the Islamic Revolutionary Guard Corps claimed responsibility for the missile strikes in Iraq, and held above US$68 a barrel on concern of further escalation in the oil-rich region. Yet the gains had largely dissipated by the end of the morning, following a US statement that no personnel had been killed and an early tweet by President Donald Trump that ‘all is well’ following the attacks.
Crude hit a three-month high of almost US$72 a barrel immediately after the incident, in which ten missiles struck the
Ayn al-Asad base in western Iraq and another facility in Erbil. The strike followed the killing of Iranian General Qassem Soleimani last week on Trump’s orders. Tensions have flared between the two nations since the US reimposed sanctions on Iran last year over its nuclear programme.
“Not a single drop of oil supply has been lost due to the recent incidents and that is why the oil price so quickly has fallen back down again,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB.
Wednesday’s early rally faded after Trump’s tweet, while Iranian Foreign Minister Mohammad Javad Zarif said on Twitter that the country had ‘concluded proportionate measures in self-defence’ and is not seeking ‘escalation or war’.
Prices also abated as officials from the Organization of Petroleum Exporting Countries promised to keep supplies flowing to customers.
“We are not forecasting a shortage of supply unless we have a catastrophic escalation, which we don’t see,” UAE Energy Minister Suhail al Mazrouei said in Abu Dhabi. OPEC secretarygeneral Mohammad Barkindo said he was ‘confident that our leaders are doing everything possible to restore normalcy’.
Brent crude rose as much as US$3.48 to US$71.75 a barrel, before trading 14 cents higher at US$68.41 on the ICE Futures Europe exchange as of 12:33pm London time on Wednesday.
West Texas Intermediate (WTI) climbed as much as US$2.95, or 4.7 per cent, to US$65.65 on the New York Mercantile Exchange, it later slipped to US$62.52.