Oil prices surged more than 4% at their high in early trading on Tuesday night after Pentagon officials said that Iran launched more than a dozen ballistic missiles against multiple bases in Iraq housing U.S. troops.
U.S. West Texas Intermediate crude futures spiked 4.5%, or $2.85, to a session high of $65.55, its highest level since April, before pulling back to $64.39. International benchmark Brent crude rose more than 4% to a session high of $70.20 per barrel, before pulling back to $70.85.
“At approximately 5:30 p.m. (EST) on January 7, Iran launched more than a dozen ballistic missiles against U.S. military and coalition forces in Iraq. It is clear that these missiles were launched from Iran and targeted at least two Iraqi military bases hosting U.S. military and coalition personnel at Al-Assad and Irbil. We are working on initial battle damage assessments,” Assistant to the Secretary of Defense for Public Affairs Jonathan Hoffman said in a statement. “We are working on initial battle damage assessments.”
U.S. stock futures plunged on Tuesday night, with the Dow Jones Industrial Average futures dropping more than 400 points at the low, indicating a loss greater than 300 points at Wednesday’s open. S&P 500 and Nasdaq 100 futures pointed to losses of at least 1%.
“The idea that Iran might wait or even not retaliate has been disabused,” Again Capital’s John Kilduff said Tuesday. “Oil now must wait out any reports of American casualties, which should then invite a fulsome U.S. response.”
He added that WTI could “easily be above $70” by morning.
Following reports of the attacks, White House press Secretary Stephanie Grisham said President Donald Trump “has been briefed and is monitoring the situation closely and consulting with his national security team.”
Tuesday’s attack comes as tensions between the United States and Iran have been building, following Thursday’s airstrike that killed Iran’s top commander Qasem Soleimani.
On Friday oil prices surged more than 3% as the Street digested possible forms of Iranian retaliation, which some said could include targeting oil production facilities in Iraq or Saudi Arabia. But by Monday fears appeared to have subsided, and oil settled little changed after initially rising more than 2%. On Tuesday, prices slid about 1%.
“My initial thought is this that the 3% move brings Brent slightly above where it traded following the air strike on Gen. Soleimani, which was faded over the past two days. The price action is reflective of ongoing geopolitical uncertainty, but not panic,” Rebecca Babin, senior energy trader at CIBC Private Wealth Management said. “The crude market response tells me the market is comfortable with current spare capacity. If Iraq’s production comes into play as this progresses it will be a very different reaction.”
This story is developing. Please check back for updates.
