Home Global Village Oil prices correct as fears of a US-Iran clash reduce

Oil prices correct as fears of a US-Iran clash reduce

Global oil prices plunged Wednesday, totally reversing an earlier brief spike that followed Iranian missile attacks on US targets in Iraq amid hopes the conflict will not escalate further. Moderated statements from both sides have helped alleviate the fears of an all-out U.S.-Iran conflict.

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Global oil prices plunged Wednesday, totally reversing an earlier brief spike that followed Iranian missile attacks on US targets in Iraq amid hopes the conflict will not escalate further.

U.S. crude oil prices tumbled 4% and hit session lows as international fears of an all-out war in the Middle East, post-Gen.Soleimani killing, eased.

Comments by Iranian officials and US President Donald Trump eased tensions substantially and pushed crude prices lower and lower in late European trading. The strikes, launched in retaliation for the assassination of Iran’s top general last Friday, sent Brent and WTI prices to multi-month peaks before profit-taking prevailed.

U.S. President Donald Trump signaled in his speech on Wednesday that tensions with Iran could be easing. Instead of indicating a military response to the Iranian attack on U.S. bases in Iraq, Trump vowed to take the economic route; imposing sanctions on Iran.

Iran said it had “concluded” its missile attacks for now, and observers remarked that they had seemed carefully calibrated to avoid US casualties. Trump told a news conference: “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.”

Iranian Foreign Minister Mohammad Javad Zarif had tweeted earlier that the country does “not seek escalation or war.”

A Eurasia Group note predicted that Tehran and US President Donald Trump will de-escalate the crisis, saying the Iran attack “appeared designed for maximum domestic effect with minimum escalatory risk.”

Read more: China & India will be the two countries dictating oil prices in 2020

Analysts pointed out that oil traders had many sources at their disposal in any event. SEB analyst Bjarne Schieldrop added that “not a single drop of oil supply has been lost due to the recent incidents and this is why the oil price has fallen back down again so quickly.”

Analysts also said the drop in prices was due in part to a weekly US oil supply report that showed higher inventories. Global stock markets initially slid on investor concern over the US-Iran clash, but European bourses mostly finished higher as anxiety over the situation ebbed.

Global oil prices plunged Wednesday, totally reversing an earlier brief spike that followed Iranian missile attacks on US targets in Iraq amid hopes the conflict will not escalate further

Wall Street stocks rallied after Trump’s late morning statement. All three major indices ended solidly higher, with the Nasdaq at a record. “At least for now, the retaliation is behind us,” said Art Hogan, chief market strategist at National Securities. “The market can move on.”

Hogan said investors are focused on an expected signing of a US-China trade accord next week and an upcoming quarterly earnings season. Among individual shares, Boeing dropped 1.8 percent, weighing on the Dow, following the fatal crash of a Ukraine International Airlines plane in Iran.

Read more: Oil prices surge in fear of Middle East conflict following Soleimani’s death

The aircraft involved in the accident was 737-800, a predecessor to the Boeing 737 MAX, which has been grounded following two earlier crashes. Analysts said it was too soon to speculate on causes of the crash but characterized the incident as another unwelcome challenge for the company.

Key figures at 2200 GMT

Brent Crude: DOWN 4.1 percent at $65.44 per barrel

West Texas Intermediate: DOWN 4.9 percent at $59.61 per barrel

New York – Dow: UP 0.6 percent at 28,745.09 (close)

New York – S&P 500: UP 0.5 percent at 3,253.05 (close)

New York – Nasdaq: UP 0.7 percent at 9,129.24 (close)

London – FTSE 100: FLAT at 7,574.93 (close)

Paris – CAC 40: UP 0.3 percent at 6,031.00 (close)

Frankfurt – DAX 30: UP 0.7 percent at 13,320.18 (close)

EURO STOXX 50: UP 0.4 percent at 3,772.56 (close)

Tokyo – Nikkei 225: DOWN 1.6 percent at 23,204,76 (close)

Shanghai – Composite: DOWN 1.2 percent at 3,066.89 (close)

Hong Kong – Hang Seng: DOWN 0.8 percent at 28,087.92 (close)

Pound/dollar: DOWN at $1.3095 from $1.3126 at 2200 GMT

Euro/pound: DOWN at 84.79 pence from 84.97 pence

Euro/dollar: DOWN at $1.1105 from $1.1153

Dollar/yen: UP at 109.13 from 108.44 yen

AFP with additional input by GVS News Desk.

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