Oil prices move higher after Iran attacks bases housing US troops in Iraq

An Iraqi oil employee walks past oil barrels at the Bai Hassan oil field, west of the multi-ethnic northern Iraqi city of Kirkuk
An Iraqi oil employee walks past oil barrels at the Bai Hassan oil field, west of the multi-ethnic northern Iraqi city of Kirkuk, on October 19, 2017. Kurdish peshmerga forces withdrew without a fight after federal government troops and militia entered Kirkuk, seizing the provincial governor's office and key military bases in response to a Kurdish vote for independence in September 2017. / AFP PHOTO / AHMAD AL-RUBAYE (Photo credit should read AHMAD AL-RUBAYE/AFP via Getty Images)

Oil prices climbed sharply Wednesday after the Pentagon said Iran launched more than a dozen ballistic missiles against bases in Iraq that house US troops, amplifying concerns about a spiraling tit-for-tat conflict between the United States and Iran.

US crude was last up more than 1.2% to over $63 a barrel, coming down slightly from a 4% spike earlier.

Brent crude, a global oil benchmark, was last up 1.6% to about $69 a barrel.

The attacks were Iran’s response to the US killing last week of top Iranian General Qasem Soleimani in Baghdad. Iran has called that attack an “act of war” and “state terrorism” and vowed a response.

“It comes as no surprise that there has been a reprisal from Iran — the concern is that this is just the sign of things to come,” said Matt Smith, director of commodity research at ClipperData.

President Donald Trump, who has previously visited one of the airbases targeted, has been briefed on the missile attacks. The Pentagon said it is “working on initial battle damage assessments” and will “take all necessary measures to protect and defend” US personnel and allies in the region.

Trump has previously vowed to hit back at Iran if it retaliated for the US drone strike that killed Qasem Soleimani, the head of the IRGC Quds Force.

Investors are on high alert for any signs of a clash between the United States and Iran that threatens oil supplies in the Middle East. Crude prices retreated earlier this week on hopes that energy supplies won’t be impacted by the tensions.

A spike in oil prices could deal a blow to the world economy, which is already struggling from weak manufacturing activity. Dow futures briefly tumbled more than 400 points during Asian trading hours on Wednesday. Dow futures were last down more than 150 points.

— CNN’s Veronica Rocha and Meg Wagner contributed to this report.

Correction: An earlier version of this report incorrectly described the bases in Iraq that were targeted.