Sky's Ian King explains how financial markets have reacted to events in the Middle East as the US kills a top Iranian commander.
Fiery aftermath of deadly US airstrike
However, Ms Sen said Iran could seek to hit targets in neighbouring Iraq as part of its response, which would also have a big impact.She went on:"Iraq is now exporting 3.5 million barrels per day. I think that is the biggest risk for the market right now." It is also thought likely that Iran, whose own oil exports have been crippled by US sanctions, will also step up its harassment of commercial shipping and oil tankers in the Strait of Hormuz, one of the world's most important shipping routes, through which around a fifth of the world's oil passes.
The apparent thaw in relations between China and the United States has raised hopes that a trade deal between the two countries is imminent.Hopes of a strong economic performance from China this year have already been boosted by news of a pick-up in business confidence and in new factory orders while, earlier this week, the People's Bank of China also announced fresh stimulus measures to encourage banks to step up their lending. All of that will have been seen as positive for the oil price.
With all of the main European stock markets lower on the news, the DAX fell by nearly 1.5%, while the MIB in Italy was down by 1% and the CAC 40 in France fell by 0.5%. Elsewhere, shares of Lufthansa fell by more than 7% in Germany, while shares of Air France-KLM fell by almost as much.
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