Closed US to deploy 3,500 new troops to Middle East — as it happened

Top Iranian General Qasem Soleimani killed in US airstrike in Baghdad, Tehran, Iran Islamic Republic Of - 03 Jan 2020

Live coverage from the FT.


US airstrike sparks flare up in Middle East tensions

There has been a dramatic escalation of tensions between the US and Iran this morning after American forces killed a top Iranian military commander in an air strike on Baghdad airport.

US forces carried out the targeted attack on Qassem Soleimani, head of the Iranian Revolutionary Guards’ overseas forces, at the direction of President Donald Trump, accusing him of developing plans to attack American diplomats and service members in Iraq.

With the death of the general significantly ratcheting up the conflict between the US and Iran, we will be reporting on the reaction as we get it live on this blog. So follow along throughout the day.


The story so far …

• Qassem Soleimani, the head of the Iranian Revolutionary Guards’ overseas forces, was assassinated on Friday in a US air strike at Baghdad airport

• The general’s death escalates the heightened tension between the US and Iran

• US Pentagon accused Soleimani of “developing plans to attack American diplomats and service members in Iraq”

• President Trump on Tuesday ordered 750 soldiers to the region after thousands of Iraqi militiamen and their supporters besieged the US embassy in Baghdad

• Iraqi prime minister Abdul Mahdi has invited parliament to convene an extraordinary session, says Reuters. He says the incident is a “dangerous escalation that will light a fuse of a destructive war in Iraq, the region and the world”, says Reuters

• Oil prices and haven assets jump on the news


Biden: Attack is ‘hugely escalatory’

Joe Biden accused President Donald Trump of throwing “dynamite into a tinderbox” with his assassination of General Qassem Soleimani, report Katrina Manson and James Politi in Washington and Najmeh Bozorgmehr in Tehran.

Mr Biden, who is leading the Democratic race to challenge Mr Trump in the November presidential election, criticised the air strike as a “hugely escalatory move in an already dangerous region”. He added that the US could be “on the brink of a major conflict across the Middle East”.

I hope the administration has thought through the second and third-order consequences of the path they have chosen. But I fear this administration has not demonstrated at any turn the discipline or long-term vision necessary — and the stakes could not be higher.

His warning came as many congressional Republicans celebrated the air strike in Baghdad against Soleimani. Michael McCaul, the top Republican on the House foreign affairs committee, said:

The president acted decisively to protect our country, diplomats, service members and citizens … For months, President Trump exercised restraint in the face of repeated hostility. Iran’s aggression continued to escalate.

Reactions to the strike reflect divided party lines as the US heads into the 2020 election and in the wake of the president’s impeachment by the House of Representatives in December.

For more on US political reaction to the attack, click here.


Soleimani killing risks all-out war – insight from the FT

The US air strike that killed Qassem Soleimani risks all-out war between US and Iran and takes Donald Trump’s presidency into dangerous territory, writes David Gardner, international affairs editor.

The assassination of the commander of the Quds Force, the elite expeditionary arm of Iran’s Revolutionary Guard, escalates the shadowy war between Tehran and Washington and its allies.

It will be difficult to prevent the cycle of reprisals and counter-attacks that will almost certainly ensue from sliding into direct confrontation — and with it the risk of all-out war.

The conflict will scatter more sparks across a region scarred by war and turmoil, and add a risk premium to international oil prices that jumped 3 per cent a barrel on the news.

In ordering the strike, Mr Trump has taken his erratic presidency into treacherous territory as he seeks simultaneously to escape from the costly US history of conflict in the Middle East, to fight impeachment and to secure his re-election.


Oil rallies on rising US-Iran tensions

The price of oil has jumped sharply in response to the killing of Qassem Soleimani as traders worry the ratcheting up of US-Iran tensions increases the threat to Middle Eastern supplies.

Brent crude, the international oil benchmark was recently up 3.5 per cent at $68.58 a barrel, putting it on track for its biggest one-day gain in a month. US marker West Texas Intermediate rose 3.2 per cent to $63.15.

Helima Croft, a former CIA analyst who heads up commodity strategy at RBC Capital Markets, said that the strikes increased risks for US oil companies such as ExxonMobil and Chevron that are active in Iraq, should Iran retaliate.

Olivier Jakob, managing director of oil consultants Petromatrix, said “the killing of Soleimani calls for a serious increase of the geopolitical risk premium.”

This was supposed to be a holiday week for many traders. Many will be cutting the holidays short and call-in for an emergency risk meeting.

Assets that are seen as shelters during times of strife also advanced.

Gold climbed 1.1 per cent to $1,545 an ounce — a near four-month high. US Treasury yields, which move inversely to the price of American sovereign debt, fell 0.06 percentage points to 1.828 per cent — the lowest level in three weeks. German Bunds and UK gilts also rallied.

For more on the market reaction to last night’s attack, check out this piece by Adam Samson and Alice Woodhouse.


US tells Americans to leave Iraq immediately

The US embassy in Baghdad has issued a statement urging American citizens to “heed the January 2020 travel advisory and depart Iraq immediately”, citing “heightened tensions in Iraq and the region”.

“US citizens should depart via airline while possible and, failing that, to other countries via land,” the statement on Friday said. “Due to Iranian-backed militia attacks at the US embassy compound, all public consular operations are suspended until further notice.”

It adds that citizens should not travel to Iraq and should avoid the US embassy.


Iran’s supreme leader calls for revenge

Ayatollah Ali Khamenei, Iran’s supreme leader, vowed to take “revenge” as he declared three days of mourning in memory of Qassem Soleimani, who was assassinated on Friday.

In a thread of five tweets, the head of state said the “loss of our dear general is bitter”, and added:


UK urges all sides to ‘de-escalate’ tensions

The UK foreign secretary Dominic Raab has called for calm in the wake of the US assassination of Qassem Soleimani.

Mr Raab said that the UK has “always recognised the aggressive threat posed by the Iranian Quds force” led by Soleimani.

But he urged both the US and Iran not to ratchet up tensions further in the wake of last night’s attack.

“Following [Soleimani's] death, we urge all parties to de-escalate,” he said. “Further conflict is in none of our interests.”



Brent hits highest since September attack on Saudi oil facilities

Oil prices have continued to climb this morning, with Brent crude, the international marker, recently crossing above $69 a barrel for the first time since last September’s attack on Saudi Arabian facilities.

Brent has now gained 4.5 per cent to trade at $69.23 a barrel. That is the highest level since drone attacks knocked out more than half of Saudi oil production four months ago and prompted fears of lengthy capacity outages.

West Texas Intermediate, the US marker, has gained 4 per cent to trade at $63.65.

Last night’s targeted strike has raised fears that should Iran retaliate, oil supply from Iraq and throughout the Middle East could come under threat.


Attack reverberates through equity markets

Qassem Soleimani’s death has ricocheted across global stock markets, with shares in oil companies benefiting while airlines have taken a hit.

Traders are concerned that last night’s strike by US forces could trigger retaliation by Iran which would threaten the security of oil supplies from the Middle East. This has pushed Brent crude, the international oil marker, above $69 a barrel for the first time since September.

Oil’s ascent has benefited shares in oil companies. UK producer BP has gained 1.9 per cent, France’s Total added 0.9 per cent, and Anglo-Dutch group Royal Dutch Shell was up 1.3 per cent.

Airlines have not fared so well, meanwhile, with the higher oil price knocking shares in major European carriers. Germany’s Lufthansa shed 7.3 per cent, Air France-KLM was down 6.8 per cent, and British Airways parent IAG fell 2.5 per cent.

Overall, the attack – and fears of heightened geopolitical tensions – have sent European stock markets lower. The Stoxx Europe 600 was down 0.8 per cent, with losses of 1.8 per cent for Frankfurt’s Dax 30, 0.6 per cent for Paris’s Cac 40 and 0.4 per cent for London’s FTSE 100.


Europeans warn of ‘dangers’ as Middle East tension revs up

The news of the US assassination of Qassem Soleimani has spooked Europeans who have grappled against rising odds to cool tensions over Iran and save a nuclear deal with Tehran that the US quit in 2018, writes Michael Peel in Brussels.

Iran is due to announce within days the latest breach of the accord, in response to Washington’s decision to exit the agreement and reimpose tough economic sanctions.

Federica Mogherini, the former EU foreign policy chief who helped broker the signing of the Iran nuclear accord by world powers in 2015, warned of “an extremely dangerous escalation in the Middle East”.

“Hope that those who still believe in wisdom and rationality will prevail, that some of the diplomatic achievements of the past will be preserved, and that a major scale confrontation will be avoided,” she tweeted.

Dominic Raab, UK foreign secretary, said on Friday that he recognised the “aggressive threat” posed by Soleimani, but urged all sides to “de-escalate hostilities”.

“Further conflict is in none of our interests,” Mr Raab said.


Iran appoints successor to Qassem Soleimani

Najmeh Bozorgmehr, FT Tehran correspondent, reports:

Iran named Brigadier General Esmail Ghaani, a deputy to Qassem Soleimani, as the new commander of the Quds forces. Supreme leader Ayatollah Khamenei praised the general’s “many years of serving the Quds forces along with the martyred general” and said “those forces’ plans will be exactly the same as they were” under Soleimani.

Thousands of Iranians across the country used the Friday prayers to condemn the killing. Iran has not yet announced when the funeral will be held.


Russia warns of ‘serious consequences’ for peace in Middle East

Russia said it was “alarmed” by the news of Qassem Soleimani’s death, Max Seddon, FT Moscow correspondent, reports.

The foreign ministry said in a statement:

This step by Washington is fraught with serious consequences for peace and stability in the region. We believe that such acts do nothing to find solutions to difficult problems, but instead lead to a new round of escalation of tensions in the region.

Foreign ministry spokesperson Maria Zakharova claimed that the US had ignored UN security council regulations about seeking consultations prior to attacking other countries.

“This won’t lead to anything except an escalation of regional tensions that’ll directly hurt millions of people,” she said.


UK’s opposition leader urges restraint from Iran and US

Labour party leader Jeremy Corbyn, in his response to the killing of Qassem Soleimani, has called for a “ratcheting down of tensions” in the Middle East in the wake of the assassination, reports Laura Hughes.

The opposition leader said:

The US assassination of Iranian general Qasem Soleimani is an extremely serious and dangerous escalation of conflict in the Middle East with global significance.

The UK government should urge restraint on the part of both Iran and the US, and stand up to the belligerent actions and rhetoric coming from the United States.

All countries in the region and beyond should seek to ratchet down the tensions to avoid deepening conflict, which can only bring further misery to the region, 17 years on from the disastrous invasion of Iraq.


Thousands protest against ‘US crimes’ in Tehran, report says

Tens of thousands rally in the Iranian capital of Tehran on Friday to protest against “US crimes”, reports Agence France Presse.


US advises ‘appropriate level of security awareness’ in Gulf states

US embassies in the Gulf issued security alerts to its citizens, citing “heightened tensions in the region” following the assassination of senior Iranian general Qassem Soleimani, reports Simeon Kerr in Dubai.

In Bahrain, the US embassy warned Americans of the potential for spontaneous demonstrations that could possibly escalate into violence.

The Gulf kingdom, a close US ally, was paralysed by pro-democracy protests in 2011 led by the majority Shia community. The uprising, while violently quelled, occasionally flares up in isolated demonstrations across the country, where the US Navy’s Fifth Fleet is based.

“While we have no information indicating a threat to American citizens, we encourage you to continually exercise the appropriate level of security awareness…in the face of any anti-US activity that may arise in Bahrain,” the embassy said in a security alert on its website.

After Friday prayers, a small group marched in one Shia village, carrying placards reading “Death to America, Death to Israel”, according to one person briefed on the demonstration.

US and Israeli flags were reportedly placed at the entrances of several mosques, allowing worshippers to tread on them on their way to prayer.

The embassy in Manama urged US citizens to remain vigilant and report any suspicious activity to the local authorities.

In Kuwait, the US embassy said it would increase its security posture “out of an abundance of caution”. It will remain open during regular business hours.
While unaware of credible threats against private US citizens in Kuwait, the embassy advised a high level of vigilance.

In the United Arab Emirates, the US encouraged its citizens to “maintain a high level of vigilance and practice good situational awareness”.


European Council urges end to ‘cycle of violence and retaliations’ in Iraq

Charles Michel, president of the European Council of EU leaders, called for an end to the “cycle of violence, provocations and retaliations which we have witnessed in Iraq over the past few weeks”, writes Michael Peel in Brussels.

He did not specifically mention the Soleimani killing.

“Further escalation must be avoided at all cost,” he said. “Iraq remains a very fragile country.”

He added: “Too many weapons and too many militias are slowing the process towards a return to normal daily life for Iraq’s citizens. The risk is a generalised flare-up of violence in the whole region and the rise of obscure forces of terrorism that thrive at times of religious and nationalist tensions.”


Germany urges ‘restraint’ as it warns of ‘dangerous escalation’

The FT’s Tobias Buck reports from Berlin:

The German government called for “prudence and restraint” in the wake of the US assassination of Qassem Soleimani, the head of the Iranian Revolutionary Guards’ overseas forces. Berlin warned that the situation in the Middle East had reached a “dangerous escalation point”.

Though Germany’s approach to Iran has been markedly less hawkish than that of the US in recent years, Berlin took care not to criticise the US strike. “The American action is a response to a series of military provocations for which Iran has been responsible,” a spokeswoman for chancellor Angela Merkel said.

She added: “We are at a dangerous escalation point. What matters now is to act with prudence and restraint and to contribute to de-escalation. Regional conflicts can only be solved through diplomacy.”

Berlin said it was especially important to keep Iraq from being dragged into the conflict, and to avoid any destabilisation of the country.

Germany currently has 130 soldiers stationed in Iraq, where they are helping to train local forces. The defence ministry said on Friday that all German troops had been ordered not to leave their military bases, which are located in Baghdad and at Camp Taji, north of the Iraqi capital.


US assassination of Iranian general roils markets

Fears of Iranian reprisals following the death of Qassem Soleimani at the hands of US forces have cascaded through global markets and across asset classes. Here is a run down of the moves as they stand.

Oil

Fears that renewed tensions between the US and Iran could hamper Middle Eastern oil supply have sent prices sharply higher.

Brent Crude: The international oil benchmark has risen 4.2 per cent to pass $69 a barrel for the first time since September.

West Texas Intermediate: The US oil marker has added 3.7 per cent to trade at $63.45.

Havens

Assets seen as shelters during times of strife have also pushed higher.

Gold has risen 1.3 per cent to $1,549 an ounce, its highest in four months.

Treasuries: US sovereign debt has shifted higher, with the yield on the 10-year note, which moves inversely to price, down 0.08 percentage points to 1.81 per cent.

Equities

Europe: European stocks have fallen on growing fears of geopolitical conflict. The Stoxx Europe 600 was recently down 0.9 per cent, led by a 1.7 per cent drop in the German Dax 30. The UK’s FTSE 100 was down 0.5 per cent.

US: Futures trade pointed to a drop when Wall Street opens later today. S&P 500 futures were down 1.3 per cent, indicating the benchmark index is set to pull back after reaching a record peak on Thursday.

Currencies

Yen: Japan’s currency, which tends to rise as domestic investors pull funds from abroad, strengthened 0.5 per cent against the dollar to ¥108.

Rand: South Africa’s rand, one of the most liquid emerging market currencies, fell 1.8 per cent against the dollar to R14.34 as investors retreat from riskier markets.


Obit: Qassem Soleimani, Iranian military commander, 1957-2020

Qassem Soleimani was the son of a labourer who became Iran’s most revered military commander and the man responsible for the Islamic republic’s involvement in a string of devastating wars across the Middle East.

Iranian politicians said, after his death, it would have been Soleimani’s dream to be “martyred” by the US, Iran’s “arch foe”, which he had tried to undermine in the Middle East for more than the two decades he led the elite Quds force.

The 62-year-old was one of the most notorious military commanders in Iran in recent decades and had long been seen as the symbol of the country’s ambitions for the region. He was so close to Iran’s supreme leader that he saw him as a son. Ayatollah Ali Khamenei said the death was “bitter” for Iran but he vowed revenge, which would make it “more bitter” for the US.

Qassem Soleimani, Iranian military commander, 1957-2020


Emerging market currencies hit by mounting Middle East tension

Emerging market currencies have dropped by the most since September as investors rush away from assets considered to be riskier.

MSCI’s broad basket of EM currencies fell 0.35 per cent on Friday, the deepest fall since September 17, according to Refinitiv data.

South Africa’s rand, which is one of the most actively traded EM currencies and is often used by traders as a way of expressing risk sentiment, took a heavy blow. It recently dropped 1.7 per cent against the dollar. Mexico’s peso, another highly-liquid currency, was off around 1 per cent.

The currencies of major oil importers, like South Korea and India, also declined as the price of Brent crude soared around 5 per cent to the highest level since September.

“The positive sentiment across the markets has been undermined by the US launching an air strike in Iraq that killed a top Iranian commander,” said Piotr Matys, an EM FX analyst at Rabobank in London.

He said while “previous episodes of rising US-Iran tensions proved relatively
short-lived” major EM currencies could sell-off further “on the back of Iran’s retaliation.”

“A response from Iran will be crucial for investors to assess the risk of a direct
military confrontation between the US and Iran,” Mr Matys said.


Pompeo tells counterparts US ‘remains committed to de-escalation’

US secretary of state Mike Pompeo said he has spoken today to his counterparts in China, the UK and Germany in the wake of the Trump administration’s decision to assassinate Qassem Soleimani.

Mr Pompeo took to Twitter to say he had reiterated the US’s “commitment to de-escalation” to Chinese director of foreign affairs Yang Jiechi, UK foreign secretary Dominic Raab and German foreign minister Heiko Maas.

“Thankful that our allies recognize the continuing aggressive threats posed by the Iranian Quds Force,” Mr Pompeo tweeted.

Meanwhile, former US national security advisor John Bolton said that he hoped the move would mark the “first step” towards regime change in Tehran:


US kept London in the dark over strike on Baghdad

The British government was not informed in advance of the US strike on Qassem Soleimani, and was left scrambling on Friday to formulate a response to the attack, report Laura Hughes and Helen Warrell in London.

The priority is to review security arrangements for military assets in the region: there are about 400 UK troops in Iraq, with most at Camp Taji to the north of Baghdad.
The others are spread between Erbil and Camp Union III in Baghdad’s Green Zone.

Another consideration is security in the Strait of Hormuz, where UK frigates help to maintain the safe passage of commercial vessels following Iran’s seizure of a British tanker last year. One government official said the decision on whether to send extra support to this operation would be made at a cross-departmental meeting on Friday. HMS Montrose, which is escorting ships through the strait, is deployed from a UK base in Bahrain.



Trump: ‘Iran never won a war’

The US president has made his first public comments in the wake of the assassination of Qassem Soleimani.

In a statement unlikely to de-escalate the increasingly tense situation, Donald Trump took to Twitter to say: “Iran never won a war, but never lost a negotiation!”

Mr Trump, who ordered the attack, had tweeted an image of the US flag in the early hours of the morning, but had otherwise remained silent until now.


Here’s the latest on today’s oil price rally

FT energy editor David Sheppard reports:

Oil prices gained more than 4 per cent to reach $69 a barrel, the highest since the attacks on Saudi Arabia’s oil facilities in September.

Thibaut Remoundos, a former Morgan Stanley oil trader who co-founded the London-based Commodities Trading Corporation (CTC), said the increase in tensions in the Middle East comes as investor interest in oil was already bouncing back after the sector fell out of favour for much of 2019.

A rally in prices in December had already reignited investor interest, with hedge funds becoming big buyers of oil futures.

I think it is important to keep in mind the shift in sentiment in the tail-end of 2019. Investors have come back to buying the energy complex after a very negative sentiment to the entire sector for most of the year.

US exchange traded funds invested in oil and gas saw the largest relative inflows of capital of any sector during the final week of the year.

This inflow into the sector is significant: The investor community now sits at around $25bn long in Brent alone (versus a around $15bn five-year average).


Pompeo says Soleimani assassination prevented ‘imminent attack’

US Secretary of State Mike Pompeo on Friday said Donald Trump ordered an air strike that killed Qassem Soleimani to prevent an “imminent attack” on American lives in the region but declined to provide additional details.

In an interview with CNN Mr Pompeo said:

The American people should know President Trump’s decision to remove Qassem Soleimani from the battlefield saved American lives, there is no doubt about that. He was actively plotting in the region to take action, a big action as he described it, that would have put dozens if not hundreds of American lives at risk. We know it was imminent, this was an intelligence based assessment that drove our decision making process.”

He added:

This is a man who has put American lives at risk for an awfully long time and last night was the time we needed to strike to make sure this imminent attack that he was working actively was disrupted.”


Middle East braced for backlash after Soleimani assassination

Simeon Kerr in Dubai, Chloe Cornish in Beirut and Andrew England in London write:

Iraqi militia leaders have mobilised their fighters as the region braced itself for the repercussions of the US’s assassination of Qassem Soleimani, who had for years overseen the Islamic republic’s regional strategy.

Officials from Baghdad to Abu Dhabi have for months feared that heightened tensions between the US and Iran could suck the region into a broader conflict.

Tehran, which backs militant groups across the Middle East, has previously warned Washington’s regional allies that they would become targets if the Trump administration attacked the Islamic republic.

Iraq has long been considered a potential flashpoint, and the US air-strike that targeted Soleimani at Baghdad airport also killed Abu Mahdi al-Muhandis, a top commander in Iraq’s Popular Mobilisation Units, an umbrella of paramilitary forces dominated by pro-Iranian Shia militias.

Click here for more reaction from the Middle East


Trump: Soleimani ‘should have been taken out many years ago’

Donald Trump on Friday said Qassem Soleimani “should have been taken out many years ago” accusing the head of the Iranian Revolutionary Guards’ overseas force had killed or injured “thousands of Americans over an extended period of time”.

In a duo of tweets, the US president said:

General Qassem Soleimani has killed or badly wounded thousands of Americans over an extended period of time, and was plotting to kill many more…but got caught! He was directly and indirectly responsible for the death of millions of people, including the recent large number….

…of PROTESTERS killed in Iran itself. While Iran will never be able to properly admit it, Soleimani was both hated and feared within the country. They are not nearly as saddened as the leaders will let the outside world believe. He should have been taken out many years ago!

Mr Trump later tweeted that Iraqis “don’t want to be dominated & controlled by Iran, but ultimately, that is their choice”. He said Iran has gained more control over Iraq over the past 15 years and added “the people of Iraq are not happy with that. It will never end well!”

The comments followed Mr Trump’s previous tweets: a photo of the American flag and a remark that Iran had never won a war but never lost a negotiation.


Foreign companies prepare to evacuate expats from Iraq

Simeon Kerr and David Sheppard report:

Foreign companies operating in Iraq have restricted travel to the country and were preparing to evacuate expatriate staff as the region braces for the repercussions of the US’s assassination of Qassem Soleimani.

“All expats from my clients are leaving ASAP,” said one security consultant.

Iraq is readying itself for potential kickback from the overnight attack that targeted Soleimani at Baghdad airport and also killed Abu Mahdi al-Muhandis, a top commander in Iraq’s Popular Mobilisation Units, an umbrella of paramilitary forces dominated by pro-Iranian Shia militias.

The US embassy in Baghdad this morning advised its citizens to leave the country immediately as fears grew of retaliation including kidnappings and attacks against American and other foreign interests in Iraq. The US has about 5,000 troops in Iraq, and western oil companies have operations in the country.

In a note to clients, S-RM, a risk consultancy, said that “symbolic” US business operations, such oil facilities, may come under direct attack by local Shia militias, as was the case earlier in 2019. “It is prudent for any overt US business operation in the Middle East to be on particular alert over the coming days,” the group added

BP and Shell declined to comment on whether they were evacuating foreign staff. Exxon and Chevron said they were monitoring the situation, but both declined to comment on the specifics of personnel movement.


Timeline of recent Iranian turmoil

The assassination of Qassem Soleimani marks the “most dramatic escalation” in the standoff between the US and Iran, said Helima Croft, strategist at RBC Capital Markets. Here is a timeline of the situation prepared by RBC.


Fears rise over security of Middle East oil supply

David Sheppard, FT energy editor, reports:

Experts have warned the risk to oil supplies from a ratcheting up of tensions in the Middle East should not be underestimated.

Brent crude jumped this morning past $69 a barrel – its highest level since last September’s drone strikes on Saudi production facilities – as traders worry any further destabilisation of the region could lead to a restriction of supplies.

Jason Bordoff, a former adviser to President Barack Obama and the founding director of the Center on Global Energy Policy at Columbia University, said:

Iran will view this as a significant provocation and will respond accordingly, potentially targeting not only US personnel or installations but key energy infrastructure in the region.

“It’s too early to know, but September’s attacks on Saudi Arabia’s Abqaiq facility may turn out to have been just the beginning,” he added.

Patrick Rogers at risk consultancy S-RM warned that while any attacks may come directly from Iran, they would “almost certainly” come via their proxies across the Middle East.

There are also particular risks to crude supplies from Iraq’s semi-autonomous north, according to Alan Mohtadi, head of T&S Consulting Energy and Security, which specialises in advising companies working in the Kurdish oil and gas sector.

“It will lead to a security vacuum if US troops and CTG (Iraqi special forces) will have to redeploy, especially around Kirkuk,” he said, noting Baghdad’s priority would be to protect Basra and the south, which could leave the north open to fresh attacks by Islamic State.


Putin says attack could ‘seriously worsen’ situation in the Middle East

Max Seddon, Moscow correspondent, reports.

Russian president Vladimir Putin discussed Soleimani’s assassination with his French counterpart Emmanuel Macron on Friday, according to a Kremlin readout of the call.

“It was stated that this act could seriously worsen the situation in the region,” the statement said.

Moscow and Tehran are Syrian president Bashar al-Assad’s key international backers. Mr Putin also opposed Mr Trump’s decision to withdraw from the Iran nuclear deal in 2018.


US stocks fall on Mideast tensions and weak factory survey

US stocks fell in early trading on Friday as Wall Street reacted to the American airstrike that killed Iran’s Qassem Soleimani and a survey showing a contraction in the manufacturing sector worsened last month.

The S&P 500 slipped as much as 1.1 per cent and was down 0.8 per cent in recent trading. The Dow Jones Industrial Average and Nasdaq Composite slid 0.8 per cent and 0.9 per cent, respectively.

The Institute for Supply Management’s index measuring US factory activity fell to its lowest level in more than a decade in December at 47.2, down from 48.1 in the prior month and missing a forecast of 49. A reading below 50 indicates a contraction.

The financial sector was the worst performer in the benchmark S&P 500, while industrials also lagged behind. Energy shares rose as US oil futures advanced more than 3 per cent.

US government debt rallied, pushing yields lower. The yield on the 10-year Treasury note dropped 5.2 basis points to 1.8299 per cent.

Investors also sought out safety in gold, which rose 1.1 per cent to $1,545.92 per ounce. The dollar index, which tracks the greenback against global currencies, gained 0.1 per cent.


Iran says it has made ‘necessary decisions’ on response to US attack

Najmeh Bozorgmehr, FT Tehran correspondent, reports:

Iran’s Supreme National Security Council, the top security body, confirmed in a statement that it had an urgent meeting on Friday morning and made “the necessary decisions” without giving details on the specifics.

The council — comprised of the most senior figures in different state bodies — vowed Iran’s revenge would come “at the right time and place” for what it called the US’s “biggest strategic mistake in West Asia region” and that that country “will not be able to easily escape from the consequences”.


Germany warns further escalation in Iran could ‘set the whole region on fire’

Tobias Buck, FT’s Berlin Correspondent, reports:

German foreign minister Heiko Maas struck a critical note in his response to the killing of Qassem Soleimani, saying the US assassination of the senior Iranian military leader had “not made it easier to reduce tensions”.

Mr Maas said in a tweet on Friday: “The US military operation followed a series of dangerous provocations by Iran. However, this action has not made it easier to reduce tensions.”

The minister said that he had made this point during a telephone call with US secretary of state Mike Pompeo earlier on Friday. Mr Maas added: “Further escalation, which could set the whole region on fire, must be prevented.”

A spokeswoman for German chancellor Angela Merkel had earlier warned of a “dangerous escalation point” in the Middle East but stopped short of criticising the US attack.


Three ways Iran could respond to Soleimani assassination and disrupt markets

The assassination of Qassem Soleimani has created uncertainty about what happens next between Iran and the US. While most Wall Street analysts do not foresee a full-blown war, they do expect a string of smaller-scale actions with implications for oil markets.

Strategists at Dutch bank ING have described a trio of potential scenarios:

1. Tanker attacks – Similar to strikes on oil tankers in the Gulf last year. Such a move could provide a temporary boost to oil prices.

2. Disruption of oil flows through the Strait of Hormuz – Blocking or disrupting oil flows in the key shipping lane could be another form of retaliation. ” The strait is a key choke point for the oil market, with more than 20 per cent of global supply moving through it. Therefore any attempt to stop flows would likely provide a boost to oil prices,” ING strategists said.

3. Attacks on oil infrastructure – Iran could potentially attack the oil infrastructure of America’s allies in the region. Indeed, Iranian backed Houthi rebels had claimed attacks on Saudi infrastructure last year.

And what would the implications for oil markets be? The analysts at ING said that any attempts to block the Strait of Hormuz could see Saudi Arabia boost oil flows through their East-West pipeline or ship through the Red Sea instead. They said:

Until there is clarity on how the Iranians may retaliate to the US airstrike, we continue to believe from a supply and demand point of view that Brent [crude] should trend back towards $60 per barrel over the course of this quarter.

Brent, the international oil marker, traded above $69 on Friday.


Pompeo: US strike aimed at ‘setting the conditions for de-escalation’

The US strike that killed Qassem Soleimani was aimed at deterring Iranian aggression and “setting the conditions for de-escalation”, secretary of state Mike Pompeo told Fox News.

“We don’t seek war with Iran, but we at the same time are not going to stand by and watch the Iranians escalate and continue to put American lives at risk without responding in a way that disrupts, defends, deters, and creates an opportunity to de-escalate the situation,” he added later in the interview on Friday morning.

The Pentagon has said US president Donald Trump took “decisive defensive action” as Soleimani was “actively developing plans to attack American diplomats and service members in Iraq.” In interviews, Mr Pompeo described the planned attack as “imminent.”

He told Fox that he hopes Iran’s leadership will respond to “American resolve” by choosing to de-escalate tensions in the region, but warned that Mr Trump and the US government are “prepared to respond appropriately” if Iran goes “the other direction.”

Mr Pompeo also criticised the Obama administration for its policy on Iran, saying: “We didn’t send pallets of cash to the Iranians.”

He added:

The risk of doing nothing was enormous … in the short term in terms of the imminent attack that Qassem Soleimani was plotting, but also highly risky – doing nothing in this region shows weakness. It emboldens Iran. It’s what’s happened under the previous administration for eight years where the Iranians felt free to conduct hundreds of attacks.


Saudi calls for restraint to avoid exacerbating situation in Iraq

Saudi Arabia on Friday said it was closely monitoring the events in Iraq and called for restraint to avoid worsening the situation in Iraq.

“The international community must assume its responsibility and take the required measures to guarantee the security and stability of this vital region to the whole world,” a Saudi official source was quoted as saying by the kingdom’s state news agency.


Record US crude oil exports underscore strong American energy position

Gregory Meyer, FT US natural resources correspondent, reports:

The US exported a record 4.5m barrels per day of crude oil last week, underscoring its relatively secure position in world energy markets as Middle East tensions escalate over its killing of Iranian military commander Qassem Soleimani.

The government figure released Friday demonstrated how the US shale drilling boom has reduced the country’s vulnerability to oil price spikes. West Texas Intermediate, the benchmark US oil grade, was trading up 2.4 per cent at $62.67 a barrel at midday in New York, less than international marker Brent.

The US still buys foreign oil — including 6.4m b/d last week — though imports have principally been rising from friendly Canada. Saudi Arabia, the de facto kingpin of the Opec cartel and Iran’s main rival in the Middle East, has been selling less and less to US refineries.

The US legalised unfettered exports of crude oil in late 2015, and they have continued to rise as ports and logistics companies build infrastructure to load supertankers. Combined with trade in refined products, the US is now a net exporter of petroleum.


NYC mayor pledges police vigilance following Soleimani strike

New York City’s mayor and top police officials advised residents to remain vigilant in the wake of the US’s assassination of Qassem Soleimani although they said there were no resulting specific, credible threats against the city at the time.

Mayor Bill de Blasio said the US was “right on the precipice of a full-blown war” with Iran and was dealing with an adversary “we have never previously confronted on this scale”, which would necessitate greater vigilance among police officers and citizens to maintain the safety of New Yorkers.

“We have entered into a different reality and we have to be ready,” Mr de Blasio said at a press conference on Friday morning.

Mr de Blasio said it was “unlikely” the city, which remains a top terrorism target, would feel the effects of this week’s actions in the Middle East immediately, but should remain on guard in the months and years ahead.

New York City police commissioner Dermot Shea said what happens in other cities and countries around the world “can and does affect us here in America and New York”. He said there would be “heightened vigilance” in terms of uniformed police officers as well as continuing ongoing dialogue with community leaders.

John Miller, deputy commissioner of intelligence & counterterrorism of the NYPD, added that police activity has already been at a heightened level in recent weeks. Part of that is normal, owing to the holiday season, while there had also been a series of anti-Semitic attacks in the region that has resulted in an increased police presence.


US to send up to 3,500 additional troops to Middle East

Katrina Manson, the FT’s US foreign policy and defence correspondent, reports from Washington:

The US was due to send up to 3,500 additional troops to the region, with most of them expected to go to Kuwait, according to US officials.

“Certainly we’re taking the Iranian threat of a possible response seriously and we are well positioned to defend US forces across the region,” a US official told the FT.


Najmeh Bozorgmehr, FT Tehran correspondent, reports:

Iran’s state television said the body of Soleimani and other Iranians and Iraqis will be taken to holy sites of Shia Muslims in Karbala and Najaf on Saturday. The body of Soleimani will be transferred to Iran later on Saturday. It is not yet clear if the funeral in Tehran will be on Sunday.


Iran foreign minister calls strike ‘strategic mistake’

Najmeh Bozorgmehr, FT Tehran correspondent, reports:

Iran’s foreign minister Mohammad Javad Zarif said his understanding was Americans made a “strategic mistake” based on “wrong advice” given to them by “fanatic” regional leaders — a clear reference to Saudi Arabia and UAE.

He told the state television that these countries suffered from an inferiority complex in the face of a successful Iranian military figure who gained popularity in the Islamic world. He fell short of threatening Iran’s rivals in the region with revenge but said the US would pay a price for its “dangerous” act and that it would not be in Iran’s control.

“People in the region, Iraqi people, Iraqi parliamentarians…will push for the US withdrawal from Iraq as of Saturday,” he said. “Today, American tourists feel insecure [in the world]. American military people feel insecure… And this is not an issue of today and tomorrow. This is going to last.”

Mr Zarif said Swiss ambassador carried a “rude” message from the US and received Iran’s “tough” response. He gave no further details.


Iranian worshippers attend a mourning prayer for Qasem Soleimani in Iran’s capital Tehran on January 3, 2020.


EU foreign policy chief urges ‘maximum restraint’

The FT’s Michael Peel reports from Brussels:

Josep Borrell, the EU’s foreign policy chief, highlighted European alarm at the developments when he said the “cycle of violence” in Iraq “must be stopped before it spirals out of control”.

“The EU calls on all the actors involved and on those partners who can have an influence to exercise maximum restraint and show responsibility in this crucial moment,” he said in a statement. “Another crisis risks jeopardizing years of efforts to stabilise Iraq. Furthermore, the ongoing escalation threatens the whole region, which has suffered immensely and whose populations deserve life in peace.”

He said the EU stood “ready to continue its engagement with all sides in order to contribute to defusing tensions and reverse the dynamics of the conflict”.


Department of Homeland Security stands ‘ready’ to combat any threats

The Department of Homeland Security said there are no specific, credible threats against the US following its assassination of Qassem Soleimani, but reiterated it stood ready to confront and combat any threats against the nation.

“As a result of yesterday’s military action, I convened senior DHS leadership last night and earlier this morning to assess potential new threats and competent actions to respond to the constantly evolving threat landscape,” Chad Wolf, acting secretary of the DHS, said in a statement on Friday.

“The entire Department remains vigilant and stands ready, as always, to defend the Homeland.”


Democrats call for Congress to reassert authority

Democratic leaders have called for a need to restore the power to go to war to Congress in the hours after the assassination of Qassem Soleimani.

Bernie Sanders, the Vermont Senator who is among the leading presidential candidates, said during a townhall that Congress needs to “reassert its constitutional authority over matters of war”. He said:

I think we have seen for several years now Trump makes decisions impulsively, without explanation, and in this case, as in the past, without any Congressional consultation. A key step in ending our endless wars is for Congress to reassert its constitutional authority. Our founding fathers had it right and they gave the responsibility of war to Congress and that is exactly where it must be placed.

Earlier on Friday both House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer said the Trump administration had not consulted with top Congressional leaders before calling the air strike that killed Soleimani. Mr Schumer added the President will need Congressional approval for further long-term action on Iran.

The Trump administration has maintained the killing of the top Iranian military commander was a “defensive action” and saved Americans lives. Thus far, Republican lawmakers have praised the move.


Trump: ‘We did not take action to start a war’

The FT’s James Politi reports:

Donald Trump denied that the US wants to “start a war” with Iran after the US president ordered the assassination of Qassem Soleimani, a senior Iranian military commander, saying the killing was a pre-emptive strike to foil “imminent and sinister” attacks on US personnel.

In a brief statement to reporters at his Mar-a-Lago resort in South Florida, Mr Trump said the Iranian Revolutionary Guard, whose international force was led by Soleimani, had injured and murdered hundreds of Americans and plotted attacks against civilians around the world.

“His reign of terror is over,” Mr Trump said. “We took action last night to stop a war. We did not take action to start a war,” he added.

In his comments, Mr Trump said the US did not “seek regime change” in Tehran but Iran’s “aggression” in the Middle East, including the use of “proxy fighters” needed to “end and it must end now”. The US president said he was prepared to take “whatever action” was necessary with respect to Iran.


Three-day funeral to be held for Soleimani

Najmeh Bozorgmehr, FT Tehran correspondent, reports

Iran’s state media said there would be a three-day funeral for Soleimani which starts on Sunday in the holy city of Mashhad in the northeast where the eighth Imam of Shia Muslims is buried.

Then, the body of Soleimani will be taken to Tehran on Monday before he will be buried on Tuesday in Kerman, in southeastern Iran where he was born.

The rare, long funeral for a national figure is expected to be the biggest after the death of Ayatollah Ruhollah Khomeini, the founder of the Islamic revolution, in 1989.