Escalation of conflict

Investors fret as Iran launches attacks on two US bases

crowds at Iran funeral

Thousands gathered for the funeral of Qasem Soleimani

Iranian missile strikes on two US bases in Iraq overnight prompted a spike in the oil price and more selling on global stock markets.

An escalation in the conflict, which may also have claimed a Ukrainian domestic flight, sent S&P 500 futures down more than 1.5%, before recovering to 0.2% lower. The S&P 500 closed down 0.28%.

Japan’s benchmark Nikkei 225 stock index fell by 1.3%, and the Hang Seng in Hong Kong was 0.8% lower.

Brent crude was up by 1.4% at $69.21 per barrel in the middle of the Asian trade, off earlier highs and amid expectations that it may be contained below $75.

Investors moved into havens such as gold.

The attack happened soon after the funeral service for Iran’s top commander Qasem Soleimani, who was killed by a US drone strike on Friday.

Iranian Foreign Minister Javad Zarif later issued a statement on Twitter, claiming the attack was self-defence and denied seeking to escalate the situation into war.

However, there is concern that shipping in the world’s busiest sea route for oil, the Strait of Hormuz will be disrupted. About a fifth of global oil supply passes through the strait which connects the Gulf with the Arabian Sea.

A Ukrainian Boeing-737 carrying more than 170 people has crashed just after take-off from Iran’s Imam Khomeini airport in Tehran, said the Fars state news agency.

Preliminary reports suggest that the plane was en route to the Ukrainian capital of Kyiv.

It is unclear whether the incident is linked to the Iran-US confrontation.

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