Oil price rises on fresh Middle East fears after deadly attack on US base

DUBAI (AFP): Oil rose Monday on fresh Middle East fears as Joe Biden pledged to retaliate after blaming Iran-backed rebels for the killing of three US service members in a drone attack on a base in Jordan.

The attack — which came two days after Yemen’s Huthi rebels struck a vessel in the Red Sea — ramped up tensions in the region and stoked worries about supplies through the key trade waterway.

Both main crude contracts rose more than one percent in early trade — hitting levels not seen since November — before paring the gains slightly.

“The news of three US troops being killed by a drone attack, and President Biden saying ‘we shall respond’, will likely dial up the market’s focus on the region,” Andrew Ticehurst, at Nomura, said.

The news comes as Israel presses on with its war against Hamas, adding to investor concerns about a wider conflagration that brings in Iran and the United States.

Still, the reports did little to dent equity markets in Asia, with traders awaiting a crucial policy decision by the US Federal Reserve this week and the release of more corporate earnings.

Hong Kong led the way, piling on more than one percent as traders welcomed news that China would stop the lending of certain shares for short selling as officials try to put a floor under the country’s battered markets.

Willer Chen of Forsyth Barr Asia said that while the move would likely have a limited effect on stabilising equities, it was “a good gesture as market participants had been calling for regulators to step in on this front”.

There was little immediate reaction from traders to news that a Hong Kong court had issued a winding-up order against Chinese developer Evergrande.

Evergrande’s Hong Kong-listed shares collapsed 20 percent on the news before they were suspended.

The decision came amid worries that a huge debt crisis in China’s property sector could spill over into the wider economy.

There were also gains in Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Jakarta and Wellington.

Asia’s upbeat start followed another record close for the Dow on Wall Street that came after the central bank’s preferred inflation gauge indicated prices were being brought under control.

As well as the Fed’s meeting, the week also sees a number of other notable events, including the release of figures on US jobs creation and consumer sentiment, and Chinese manufacturing activity.

Amazon, Microsoft and other large technology companies are also due to report their earnings.

– Key figures around 0230 GMT –

West Texas Intermediate: UP 0.6 percent at $78.44 per barrel

Brent North Sea Crude: UP 0.5 percent at $83.39 per barrel

Tokyo – Nikkei 225: UP 0.9 percent at 36,079.14 (break)

Hong Kong – Hang Seng Index: UP 1.0 percent at 16,105.17

Shanghai – Composite: UP 0.1 percent at 2,912.74

Dollar/yen: UP at 148.21 yen from 148.13 yen on Friday

Euro/dollar: DOWN at $1.0841 from $1.0858

Pound/dollar: DOWN at $1.2700 from $1.2703

Euro/pound: DOWN at 85.38 pence from 85.44 pence

New York – Dow: UP 0.2 percent at 38,109.43 (close)

London – FTSE 100: UP 1.4 percent at 7,635.09 (close)

Biden vows US ‘shall respond’ after troops killed in Jordan

A drone attack on a base in Jordan killed three American troops and wounded more than 30 on Sunday, with President Joe Biden blaming Iran-backed militants and vowing to hold the perpetrators to account.

It is the first time American military personnel have been killed by hostile fire in the Middle East since the war between Israel and Iran-backed Hamas began, and the incident will further raise tensions in the region and add to fears of a broader conflict directly involving Tehran.

“While we are still gathering the facts of this attack, we know it was carried out by radical Iran-backed militant groups operating in Syria and Iraq,” Biden said in a statement, pledging to hold “all those responsible to account at a time and in a manner of our choosing.”

Later in the day at a South Carolina church banquet hall, the president held a moment of silence for the US troops killed in the attack, then said: “We shall respond.”

– ‘Regional explosion’ –

Hamas spokesman Sami Abu Zuhri called the attack “a message to the American administration that unless the killing of innocent people in Gaza stops, it may be faced with the entire (Muslim) nation.”

“The continuation of the American-Zionist aggression on Gaza risks a regional explosion,” Abu Zuhri said.

The US Central Command (CENTCOM) said Sunday evening that the attack had hit a logistics support base located at Tower 22, in northeast Jordan, and that it wounded at least 34 service members, eight of whom required evacuation from the country.

There are around 350 US Army and Air Force personnel at the base who conduct “a number of key support functions,” including for the international coalition against the Islamic State jihadist group, CENTCOM said.

Jordan’s government spokesman Muhannad Mubaidin, after initially claiming the attack took place in neighboring Syria, later said it “targeted an advanced position on the border with Syria.”

Mubaidin condemned the attack, as did Bahrain, Egypt and Britain, whose Foreign Secretary David Cameron called on Iran to “de-escalate in the region.”

– Growing Middle East crisis –

The escalating Middle East conflict poses a challenge to Biden in an election year, with various Republican politicians quick to take aim at the president over the deadly attack, including his predecessor Donald Trump, who described the situation as a “consequence of Joe Biden’s weakness and surrender.”

US and allied forces in Iraq and Syria have been targeted in more than 150 attacks since mid-October, according to the Pentagon, and Washington has carried out retaliatory strikes in both countries.

Many of the attacks on US personnel have been claimed by the Islamic Resistance in Iraq, a loose alliance of Iran-linked armed groups that oppose US support for Israel in the Gaza conflict.

The latest round of the Israel-Hamas conflict began when the Palestinian militant group carried out a shock attack on October 7 that resulted in about 1,140 deaths, mostly civilians, according to an AFP tally of official figures.

Following the attack, the United States rushed military aid to Israel, which has carried out a relentless military offensive that has killed at least 26,422 people in Gaza, most of them women and children, according to the Gaza health ministry.

Those deaths have sparked widespread anger across the region and stoked violence involving Iran-backed groups in Lebanon, Iraq and Syria as well as Yemen.

The Lebanon portion of the conflict has been limited to near daily exchanges of fire between Hezbollah and Israel, but American forces are directly involved in Iraq and Syria, as well as in Yemen.

The United States and Britain have both carried out strikes targeting Yemen’s Iran-backed Huthi rebels, who have carried out more than two months of attacks on shipping.

The growing violence in multiple parts of the Middle East has raised fears of a broader regional conflict directly involving Iran — a worst-case scenario that Washington is desperately seeking to avoid.