Crude oil prices first spiked and then retreated after newswires reported Iran’s retaliation against the U.S., targeting military bases housing U.S. troops in Iraq.
After their initial spike, however, price retreated, and at the time of writing Brent crude was trading at $67.80 per barrel, with West Texas Intermediate at $62.07 a barrel. As the situation develops more sudden moves in benchmarks are almost a certainty.
Brent and WTI first spiked on Friday, after the United States carried out a drone attack on a convoy including the leader of the Quds force of the Iranian Islamic Revolutionary Guard Corps, General Qassem Soleimani. Iran threatened retaliation and since then, it was only a matter of time before it followed through with its threat.
However, soon after media reported the missile strikes on the Iraq military bases, President Donald Trump tweeted that all was well and the number of casualties and the extent of damage were being assessed. Iranian media, however, claimed the attacks had killed 80 U.S. troops, damaging helicopters and military equipment. Per a Reuters report, the Iranian media supplied no explanation of the source of this information.
A tweet from President Trump, however, seemed sufficient to defuse tension on the oil market, at least temporarily, with prices retreating from their initial highs that followed the Friday assassination. Over the course of the trading session today all sorts of surprises are likely although it’s safe to say the overall movement will be in the upward direction as the markets awaits the U.S. response to the attacks.
Meanwhile, U.S. oil companies rushed to hedge their production at the higher oil prices. According to industry sources that spoke to Bloomberg, many shale producers added more hedges for their production to lock in the higher prices for their output this year and the next.
By Irina Slav for Oilprice.com
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