Oil rally cools as Ira­nian strike causes no US casualties

Muscat Daily - - BUSINESS -

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.

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