NEW YORK, Jan. 8 (Xinhua) -- Oil prices plunged over 4 percent on Wednesday after a roller-coaster ride as market participants assessed the possibility of a global crude supply disruption by monitoring the latest development of U.S.-Iran tensions.
The United States killed Major General Qassem Soleimani, commander of Iran's Islamic Revolution Guard Corps Quds Force, in an airstrike in Baghdad on Friday, escalating tensions in the Middle East.
Market participants feared that the rising Mideast tensions could impact energy production in the oil-rich region, which accounts for almost one third of global oil supply, analysts have said.
Oil prices surged more than 3 percent immediately after the Soleimani news came out, notching a multi-month high, and continued to rise on Monday.
The market on Tuesday took a little breather over the course of Monday trading. Risk factors were at least temporarily reassessed, and equity markets recovered while oil gave back some of its gains, JBC energy said in a note.
However, Iran launched ballistic missiles at Iraqi bases housing U.S. troops in retaliation for the U.S. killing of Soleimani between 01:45 a.m. and 2:15 a.m. Wednesday local time (2245 and 2315 GMT on Tuesday).
International benchmark Brent crude surged more than 4 percent in response to the attack to a high of 71.75 U.S. dollars per barrel, its highest since September.
U.S. West Texas Intermediate crude (WTI) spiked more than 4 percent in overnight trading, when it hit 65.65 dollars a barrel.
On Wednesday, U.S. President Donald Trump said that the Iranian missile attack inflicted no U.S. casualties and that "Iran appears to be standing down," calling it "a good thing" for all parties concerned.
Analysts said traders have interpreted the comment as a move toward de-escalation.
Both Brent crude and WTI crude reversed the gains and settled more than 4 percent lower on Wednesday.
Analysts have said that the impact of U.S.-Iran tensions on the market may be short-lived.
"Despite their influence recently, we doubt that U.S.-Iran tensions will play more than a minor role in deciding the best and worst-performing asset classes in 2020 as a whole, at least outside the Middle East," said Oliver Jones, a senior markets economist at the economic research consultancy Capital Economics.
He added that historical evidence shows that market reaction to even major U.S. military interventions in the Middle East is hard to predict, and often quickly swamped by other things.
In addition, comments from the United Arab Emirates (UAE)'s Energy Minister Suhail Al Mazrouei also helped ease fears of supply disruption.
He said on Wednesday that the market is well supplied at the moment and called for de-escalation in order to maintain the security of the oil markets.