"There was an immediate panic in oil because traders were very nervous. It seems now the market is easing those concerns because it seems to be an isolated incident. But issues that developed in Nigeria and U.K. are still pushing oil up."
Thus spoke vice president of futures brokerage Alaron Trading’s Phil Flynn with regards to a report that a United States ship patroling the Persian Gulf fired upon an Iranian seagoing vessel.
Already heading higher, oil futures being traded on the New York Mercantile Exchange climbed to $119.50 on Friday morning, only $0.40 off from their record closing high price.
The Grangemouth oil refinery in Scotland is anticipating a workers’ strike on Monday, and another strike already in process by workers at Mobil Producing Nigeria Unlimited in Nigeria, coupled with militants’ repeated efforts to disrupt shipments and destroy pipelines in that nation, are the issues that Flynn referred to.
Investors’ concerns over rising oil and gas prices in the wake of the news, in addition to new government reports of the lowest Consumer Confidence Index results in 25 years and a disappointing earnings report from Microsoft all conspired to drive down stock prices for the first time since Tuesday.
"The Microsoft number surprised a lot of people. They’re showing some consumer weakness in certain parts of their business," said John Sauickie with Wood Asset Management in Sarasota, Florida.
The ship that fired warning shots over the bow of the Iranian vessel was the Westward Venture, which is working for the U.S. Military Sealift Command under a 65-day charter agrement.
The Westward Venture was transporting U.S. Navy military-related cargo.
An Iranian vessel, accompanied by a second, sailed too close to the U.S. ship within internationally recognized waters, which sounded warning sirens and showed warning flares before finally sending .50-caliber machine gun blasts over the Iranian vessel’s bow.
Admiral Michael Mullen, the chairman of the Joint Chiefs of Staff, on Friday accused Iran of sending weapons and giving guerilla training to anti-NATO forces both in Iraq and in Afghanistan.
Consumer confidence has fallen so far down in the United States due to the credit crunch in the wake of the housing bubble bust, relentlessly rising oil and other commodity prices, and unemployment fears, although reports just published by the federal government indicate that unemployment numbers are reflecting economic resiliency and do not show definitive signals of a recession.
The U.S. government begins sending out its economic stimulus tax rebates earlier than expected beginning this coming Monday, first in the form of electronic deposits for tax filers who filed electronically, with plans to have the extra cash injected into the economy by consumers to lift the economy and consumer confidence as a whole. However, many U.S. consumers have said they will either bank the money or use it to pay down debts instead of increasing their consumption.