Oil Prices Climb Sharply After Iran Launches Attacks

Oil prices shot up sharply Tuesday evening after the Pentagon reported Iran launched more than a dozen ballistic missiles against the United States' bases in Iraq in retaliation for the drone strike that killed Iranian senior Gen. Qassam Soleiani last weekend.

U.S. crude prices jumped by more than 4% to over $65 a barrel, reports CNN, after settling at $62.70 a barrel during regular trading. It ended up climbing to $65.48 a barrel.

MarketWatch noted the attacks and the likelihood of U.S. retaliation have raised the possibility of oil supply disruptions, as well as violence spreading across the Middle East.

Oil prices closed lower for the first time in three days Tuesday, notes MarketWatch, but went up sharply as news of the attack broke.

The U.S. benchmark, West Texas Intermediate crude for February delivery jumped more than 4% in electronic trading, up from a settlement of $62.70 on the New York Mercantile Exchange.

Meanwhile, March Brent crude, the global benchmark, began electronic trading at 8 p.m. ET up more than 4%. The benchmark prices moderated as trading went on, and were still up by 3.5% as of MarketWatch's last report.

The news also sparked a surge in gold futures, with February delivery prices up 2.1% while trading at $1,609.3 per ounce, reports CNBC.

The news comes as markets tumbled in the United States and Asia upon news of the attacks. CNBC reports the Dow Jones Industrial Average futures dropped 410 points and indicated a loss of 432 points at Wednesday's open. S&P 500 and Nasdaq 100 futures pointed to losses of at least 1.5%.

Markets also tumbled in Asia, with Nikkei 225 in Japan down more than 2%. The Japanese yen, another safe-haven asset, strengthened against the U.S. dollar, however, trading at 107.89 around 7:45 a.m. HK/SIN, from an earlier low of 108.52.

David Bahnsen, chief investment officer of The Bahnsen Group, urged investors not to overreact to the news of the attacks or the drop in the Dow futures.

"What we know when Dow futures drop 400 points a day before a market open is that the majority of the time the market either closes much worse or frequently much better," Bahnsen said in an email to MarketWatch. "The initial response is usually not the right one. Investors would be wise to watch the response not just in equities, but in oil prices and in bond yields. And they would really be wise to watch the response over several days and maybe weeks, not minutes or hours."