Oil prices calmed on Wednesday following an early surge due
to concerns that global oil supplies may be disrupted after Iran fired rockets
at military bases in Iraq hosting United States forces, raising the prospect of
a regional conflagration that could disrupt oil supplies.
Stocks were still down for the day but had erased some earlier
losses as tweets by US President Donald Trump and Iran's foreign minister
appeared to signal a period of calm - for now.
Brent crude futures were up 97 cents or 1.4 percent to
$69.24 by around 04:03 GMT, after earlier rising to $71.75, the highest since
mid-September 2019.
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| Oil Surges |
West Texas Intermediate crude futures climbed 82 cents, or
1.3 percent, to $63.52 a barrel. It earlier reached a high of $65.85, the most
since late April last year.
"What we have seen is a very limited air strike on
bases in Iraq and that has been somewhat a relief to the markets," said
Abid Ali, Al Jazeera's economics editor.
"Initially we saw the markets fall by 2.2 percent in
Japan, but that has recovered. We expected US markets to open lower by possibly
about 1.7 percent but futures have pared back. And all of this is because of
President Trump's latest tweet - that 'all is well' - which has sort of calmed
things down," he said.
Iran launched an attack on US-led forces in Iraq, the US
military said on Tuesday, adding that Tehran fired more than a dozen rockets
from Iranian territory against at least two Iraqi military bases hosting US-led
coalition personnel.
In response, Trump tweeted: "Missiles launched from
Iran at two military bases located in Iraq. Assessment of casualties &
damages taking place now. So far, so good!"
The attacks follow the US killing of Iranian military
commander Qassem Soleimani in Iraq last week. Iran had promised a severe response.
Attention has turned to the Straits of Hormuz in Iran,
through which 34 million barrels of oil are shipped to the US every month, Al
Jazeera's Ali said.
"If there had been an attack on or a blockage of the
straits, then we would see oil prices shoot up to $150 a barrel and that would
be catastrophic for the global economy. But what we have seen is a very limited
air strike on bases in Iraq and that has been somewhat a relief to the
markets," he said.
"Things have calmed down and hopefully it will remain
that way," Ali added.
The price of gold initially shot past $1,600 per ounce
($45,359.20 per gramme) on the spot market but later pared gains to trade at $1,593.56
per ounce ($45,176.63 per gramme), as investors rushed to safe-haven
investments. Although Asian shares and US treasury yields plunged on Wednesday
as investors feared that military action between Iran and the US could
escalate, they later clawed back some losses.
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