CRUDE oil prices rose for the first time in four months to $71.75 per barrel, after Iran launched ballistic missiles striking two United States, US, military bases in Iraq, indicating a further escalation of tension between both countries.

Brent crude, Nigeria’s crude equivalent increased by 4 per cent on Wednesday to $71.75 per barrel, its highest since September, before pulling back to $69.86 while  NYMEX February light sweet crude increased by 2.19 per cent to settle at $64.07 per barrel.

According to a report, Iranian state TV said Tehran had started an attack on US facilities in Iraq in retaliation to a US-led drone strike in Baghdad that killed General Qasem Soleimani.

The US Department of Defence said Iran launched more than a dozen ballistic missiles at bases housing US troops.

However, analysts suggest that the further escalation of crises in the Gulf region could put the oil market prices at risk of lower prices if the war trend is not curtailed.

“Retaliatory action taken by Iran in the face of the on-going US-Iran tensions sets the market’s risk aversion interest on fire. With expectations of further friction from here, investors appear to be pricing for an all-out war,” a market strategist Pan Jingyi said in an interview with S & P Global Platts.

Energy minister of the United Arab Emirates, Suhail Al Mazrouei on Wednesday stated that OPEC would respond effectively as tensions rise in the Middle East, insisting that no country can afford a return to a situation where crude oil costs $100 per barrel.

“The Strait of Hormuz is not only important for us, but it also is important for the world economy and the whole supply chain, and Iran understands that,” said al Mazrouei.

“The world economy cannot sustain another $100 oil price and another huge spike,” he said.

The Organisation of Petroleum Exporting Countries, OPEC, has tried to improve compliance with output cuts, which for OPEC+ reached well above the target to 146 per cent in 2019. Iraq and Nigeria have promised to improve their compliance.

Iraq pumped 4.68 million barrels per day in November which accounts for close to 5 per cent of global crude oil output, according to S&P Global Platts latest survey of OPEC production.

“Retaliatory action taken by Iran in the face of the on-going US-Iran tensions sets the market’s risk aversion interest on fire. With expectations of further friction from here, investors appear to be pricing for an all-out war,” a market strategist Pan Jingyi said in an interview with S & P Global Platts.

OPEC members and OPEC+ alliance are expected to meet in Vienna in March to discuss their oil production cuts, which were expanded by about 500,000 ba/d to 1.7 million b/d for January to March. The cut is even bigger counting Saudi Arabia’s promise to cut an additional 400,000 b/d.