Oil Markets Rally, Stocks Take Further Plunge After Iranian Reprisal Attacks on US Bases

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The price of crude saw a significant jump following a series of Iranian missile strikes on American bases in Iraq in retaliation for Washington’s assassination of Tehran’s elite commander, which also sent US stocks and financial markets across Asia plummeting as concerns of a large-scale regional war start to have an effect.

Global oil prices quickly rose due to the US-Iran conflict, nearing four-month highs above $70 per barrel. The retaliatory operation drove the US oil benchmark, West Texas Intermediate crude, to gain some 3.4 percent, while Brent crude is up similarly, by over 3.5 percent. The Dow Jones, meanwhile, took a hit, dropping by nearly 120 points, as the S&P 500 and NASDAQ also struggled, losing 9.1 and 2.8 points respectively.

The Asian stock market also reacted to the news, with Hong Kong’s main index, the Hang Seng, falling below 28,000 points and touching its lowest level since the end of last year, after losing 1.15 percent during the trading session. China’s Shanghai Composite faced almost similar losses, closing at 3,070.05 points.

The Nikkei 225 in Japan closed 1.57 percent lower. Singapore’s Straits Times Index was trading around 0.8 percent below the previous close. Australian shares felt an early morning drop of more than 1 percent. The Indian equity market has tracked its Asian peers and slid one percent.

Shares of Saudi Aramco opened at 34 riyals ($9.06) on Wednesday, their lowest level since the oil giant began trading in mid-December. Saudi stocks also dropped 1.4%, following across-the-board selling in Persian Gulf markets amid escalating tensions between the United States and Iran.

Gold prices hit fresh highs, jumping more than two percent on Wednesday, as investors flocked to safe havens. Spot gold topped $1,1610 an ounce during the trading session – a price that has not been seen since March 2013 – before scaling back below the key mark.

Earlier on Wednesday, the Islamic Revolution Guards Corps (IRGC) Aerospace Force started ballistic missile attacks on US Ein Al-Assad airbase in southwestern Iraq near the border with Syria and a US-operated airbase in Erbil in retaliation for the assassination of Qods Force Commander Lieutenant General Qassem Soleimani.

Ein Al-Assad is an airbase with a 4km runway at 188m altitude from sea levels, which is the main and the largest US airbase in Iraq. Early reports said the radar systems and missile defense shields in Ein Al-Assad have failed to operate and intercept the Iranian missiles. Unofficial reports said the US army’s central radar systems at Ein Al-Assad had been jammed by electronic warfare.

Some 80 US army personnel are said to have been killed and nearly 200 more wounded in Iran’s Wednesday missile attacks. The second IRGC reprisal attack targeted a US military base near Erbil airport in the Iraqi Kurdistan Region in the second leg of “Martyr Soleimani” reprisal operation.

All flights have been canceled at Erbil airport. Iraq said the attacks have not taken any toll from its army men stationed at these two bases. The US army had blocked entrance into Ein Al-Assad to everyone, including the Iraqi army. This is the first direct attack on the US military ever since World War Two.

IRGC officials said none of the missiles had been intercepted. Following the attack, the IRGC issued a statement immediately after the attacks, declaring that it has fired tens of surface-to-surface missile at “the airbase occupied by the terrorist and aggressive army of the United States known as Ein Al-Assad” in reprisal for the assassination of IRGC Qods Force Commander Lieutenant General Qassem Soleimani.

The IRGC warned the US to avoid retaliating the Wednesday attack or else “it will face a more painful and crushing response”. The IRGC Statement also warned “all the US allied states where the terrorist army has a base, any territory that becomes the origin of any hostile and aggressive action against the Islamic Republic of Iran in any way will be targeted”.

The IRGC also called on the Americans to pressure the White House to pull their troops out of the region to avoid further damage and not allow the US to endanger the lives of their military men. All Iranian underground missile towns are on alert. The missile attack came hours before General Soleimani was laid to rest.

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