Assassinations, militaries on high alert, geopolitical tensions at the boil. Any one of these in Persian Gulf countries would have roiled oil prices a few years ago. Today, even in combination, they hardly register.
Is the oil market now so secure that even the prospect of war between Iran and the U.S. has little effect? More broadly, is this relatively sanguine response warranted at this time?
Reasons oil traders should be nervous
The assassination of Qassem Soleimani, Iran’s top military commander and head of its Revolutionary Guards, happened on Iraqi soil, without Iraqi permission, while Soleimani was reportedly on official business.
This attack by a U.S. drone, which killed up to 10 Iranian and Iraqi personnel, transgressed two nations’ sovereignty. It could be easily defined as an act of war.
Iran did so and responded with a missile barrage at two U.S. bases, apparently causing no casualties. Secretary of State Mike Pompeo, meanwhile, completely rejected Iraq’s demand that American troops leave its soil, only a week after U.S. warplanes carried out lethal attacks on Iran-backed militias in Iraq, also without Iraqi authorization.