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Summary:
- Oil prices rose as the Middle East conflict escalated into an 11th consecutive night of US-Iran attacks.
- Iran’s top joint military command warned that all US and allied interests in the region will be targeted if the US strikes Iran’s nuclear sites, calling it an expansion of the war.
- Kuwait’s military said its air defence system intercepted Iranian drones, while IRNA reported drone and missile attacks on US bases in Kuwait and Bahrain.
- Heavy strikes were reported in Behbahan and Mahshahr, with explosions in Tabriz, Bandar Abbas, Chabahar and Kangavar; Bandar Abbas was hit particularly hard, with strikes also reported in Sirik, Bushehr, west of Tabriz and Urmia.
- Unconfirmed reports suggested the US struck the Bidboland Gas Refinery in Mahshahr, Iran’s largest gas processing facility and the largest gas hub in west Asia.
- Gold rose strongly, climbing above $4,100 and accelerating to around $4,140, while USD/JPY held barely below its 40-year high near 163.20.
- Regional stocks took their cue from Wall Street rather than the conflict, with Japan’s Nikkei up over 1.5% and South Korea’s Kospi up more than 4.5%.
Oil prices climbed higher as the Middle East conflict escalated further into an 11th consecutive night of exchanges between US and Iranian forces, with strikes hitting military, energy and gas infrastructure across several Iranian cities and reports of Iranian drone and missile attacks on US bases in the Gulf.
Iran’s top joint military command said on state television that all US and allied interests in the region would be targeted if the United States struck Iran’s nuclear sites, warning that such an attack would amount to an expansion of the war. Shortly after, Kuwait’s military said its air defence system was intercepting Iranian drones, while Iranian state media outlet IRNA reported drone and missile attacks on US bases in both Kuwait and Bahrain.
As the night progressed, reports emerged of heavy strikes in Behbahan and Mahshahr, with explosions heard in Tabriz in Iran’s northwest and further blasts reported in Bandar Abbas, Chabahar and Kangavar. Iran’s port city of Bandar Abbas was said to have been hit particularly hard. In total, US strikes were reported across Behbahan, Mahshahr, Bandar Abbas, Sirik, Chabahar, Bushehr, areas west of Tabriz and Urmia. Separately, unconfirmed reports suggested the US had struck the Bidboland Gas Refinery in Mahshahr, Khuzestan province, which is Iran’s largest gas processing facility and the largest gas hub in west Asia, though these reports had not been verified.
Despite the scale of the escalation, gold pushed strongly higher, climbing above 4,100 dollars an ounce before accelerating further to around 4,140 dollars, extending a recovery that had already brought the metal back near a two week high earlier in the week. The move builds on the structural support central banks, led by China, have been providing to gold in recent months, alongside signs the metal had been undervaluing the conflict’s risk premium through much of the war to this point.
USD/JPY held close to its recent 40 year high, trading barely lower than around 163.20, as the broader dollar strength tied to the conflict and diverging rate expectations between the Federal Reserve and the Bank of Japan continued to weigh on the yen.
Regional equity markets took their cue from a firmer session on Wall Street rather than the escalating conflict, with Japan’s Nikkei up more than 1.5 percent and South Korea’s Kospi rallying more than 4.5 percent, underscoring a disconnect between risk appetite in equities and the intensifying military exchanges in the Gulf.
This article was written by Eamonn Sheridan at investinglive.com.
