Oil Prices Retreat After Trump’s Remarks on Missile Attacks

January 9, 2020
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Tensions in the Middle East may be easing almost as quickly as they started. Last week, the United States launched a drone strike in Iraq, killing Iranian Major General Qasem Soleimani at an airport in Baghdad. Iran responded this week with missile strikes on Iraqi bases that house U.S. troops.

Market futures dropped after Iran’s retaliation, with many investors fearing that an all-out war was a real possibility. Oil prices increased to their highest levels in months. However, President Trump spoke publicly on Wednesday afternoon, putting investors and the wider public at ease.

What Did President Trump Say in His Address?

There are several key takeaways from Trump’s Wednesday address that indicate the situation is not as grim as originally predicted.

  • The President confirmed that no Americans were killed in missile strikes. Top military officials believe that Iran intentionally missed key targets, wanting to send a message rather than escalate the situation.
  • Iran appears to be standing down for now, although cyber attacks originating from the Middle East nation have increased this week.
  • Trump reiterated that Qasem Soleimani was planning attacks on U.S. targets, and called the General “the world’s top terrorist.”
  • New economic sanctions will be imposed on Iran.

Trump’s speech was received positively by the markets. Stocks were up in after-hours trading, giving hope to investors who expect another year of strong gains.

Oil Prices Have Come Down

Iran has major political influence over one of the world’s richest oil-producing regions. It also has the capability to disrupt shipping in the Persian Gulf, where a significant amount of oil is transported.

Oil jumped by more than 4% after news of the Iranian missile launches. However, following Trump’s comments, the price per barrel fell back down to previous levels. Americans were also reminded that the United States is now the world’s largest natural gas and oil producer, with Trump saying that the energy industry is ‘independent’.

Major producers in the Middle East reassured the world that they would maintain output and take measures to prevent prices from climbing to unmaintainable levels.

While the potential for further escalation between the United States and Iran remains, it seems that no major events will disrupt stocks or the wider global economy in the short term.

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