(LONDON, UK) – Oil prices rose sharply on global markets after military action involving the United States and Saudi Arabia in Iraq and reports that ballistic missiles launched by Iran towards United States forces in the Middle East were intercepted. Concerns over regional security and tighter crude supplies also supported higher energy prices.
According to Reuters, Brent crude futures increased by US$3.30, or 3.9%, to US$87.39 per barrel. This is equivalent to about €74.40 and £64.90 at current exchange rates.
United States benchmark West Texas Intermediate crude rose by US$3.05, or 3.8%, to US$82.31 per barrel, equivalent to about €70.10 and £61.10.
The increase was also supported by lower crude oil inventories in the United States, adding to expectations of tighter global supplies at a time of increased geopolitical uncertainty.
Analysts at ING said the market returned to higher levels after the United States reported that it had intercepted what it described as a surprise attack targeting American forces. Saudi Arabia also intercepted drones launched by Iran backed groups in Iraq that were aimed at the country’s energy infrastructure.
The analysts added that United States and Saudi forces carried out strikes against facilities in eastern Iraq that they said belonged to Iran backed armed groups.
Market analysts said the latest developments have reduced expectations that tensions in the Persian Gulf will ease in the near future. The renewed security concerns have increased fears of possible disruption to oil production, transport routes and regional energy infrastructure.
The United States military said it intercepted ballistic missiles launched by Iran towards American forces in the Middle East. Washington described the incident as an attempted surprise attack by Tehran.
Iran’s Islamic Revolutionary Guard Corps later said it had launched several ballistic missiles targeting a United States air base and the headquarters of the United States Central Command in Jordan.
The developments are being closely watched by global energy markets because any disruption to oil production or transport in the Middle East could affect fuel prices, inflation and business costs around the world.
Separately, United States President Donald Trump said that if negotiations with Iran fail, his administration is prepared to resume large scale military operations, adding another source of uncertainty for global energy markets and investors.