Oil fell as Iran’s retaliatory strikes on US bases in Qatar were less severe than investors feared, allaying some concerns that the conflict would immediately disrupt supplies from West Asia.
Futures for West Texas Intermediate fell 5.3 per cent to $69.9 a barrel, while Brent oil futures fell by similar amounts after Iran launched six missiles toward US bases in Qatar, according to an Axios report. Traders had initially feared that Iran’s retaliatory response would involve a closure of the Strait of Hormuz chokepoint, through which about a fifth of the world’s oil passes.
Earlier in the session, prices weakened after Trump warned against rising oil prices in a social media post, urging the Energy Department to facilitate more drilling “now.” Energy Secretary Chris Wright replied, “We’re on it.”
Crude’s gains had begun fading even before Trump’s post. While there was initial concern that Iran would interfere with energy flows in retaliation for US air attacks on its nuclear sites over the weekend, those fears have ebbed somewhat. Tehran warned earlier that the strikes would trigger “everlasting consequences,” and Reuters reported that the US sees a high risk of a strike against US forces soon.
“This appears to me well orchestrated, Iran hits an empty US base, plenty of warning ahead with airspace closure and guidance for shelter. Iran gets its face saving response and stays clear of the Straits of Hormuz,” said Harry Tchilinguirian, group head of research at Onyx Capital Group.
