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Markets Return To Calm, Oil Retreats As Mideast Avoids Escalation

Iraqi Kurds inspect a crater reportedly caused by an Iranian missile initially fired at Iraqi bases housing U.S. and other U.S.-led coalition troops, in the Iraqi Kurdish town of Bardarash in the Dohuk governorate, January 8, 2019

As the danger of an immediate U.S. retaliation against Iran’s missile attack receded, world markets stabilized on Wednesday and oil prices pulled back from earlier gains.

Stocks were mostly flat before midday on Wall Street, but energy stocks dipped as oil prices gave back their earlier gains.

Iran’s oil minister Bijan Zanganeh said in Tehran that oil prices rise during instability and go lower when stability is restored.

He added that currently oil prices are on an upward trajectory, which “is in our interest”.

Iran’s oil exports are a fraction of what they were at the beginning of 2018, as the United States has imposed crippling sanctions on Iranian crude exports.

Oil had gained around three dollars a barrel early on Wednesday, when Iran launched more than a dozen missiles at two military bases in Iraq hosting U.S. forces. President Donald Trump had warned earlier that in case of any Iranian attack the U.S. would harshly retaliate, but no counter-attack has materialized so far.

U.S. officials and Iraq have said there have been no casualties in the Iranian attack; a fact that might have prevented U.S. retaliation.