Gulf crisis

BBCCopyright: BBC

Oil prices have risen following Iran's attacks on US troops in Iraq in retaliation for the assassination of Iranian military commander Qasem Soleimani.

But why?

There are fears the escalation of the conflict between the US and Iran could disrupt shipping in the world's busiest sea route for oil, the Strait of Hormuz.

Around a fifth of global oil supply passes through the strait which connects the Gulf with the Arabian Sea.

The Strait of Hormuz is vital for the main oil exporters in the Gulf region - Saudi Arabia, Iraq, the UAE, and Kuwait - whose economies are built around oil and gas production. Iran also relies heavily on this route for its oil exports.

Qatar, the world's biggest producer of liquefied natural gas (LNG), exports nearly all its gas through the strait.

Welcome to Business Live.

A Boeing 737 plane flying out of Iran has crashed.

It is not clear what caused the disaster on board the Ukraine International Airlines flight from Tehran to Kyiv and if it is linked to tensions between the US and Iran.

However, it is the third crash involving a Boeing plane since October 2018.

Markets are reacting to Iran's retaliatory attacks against US airbases and we'll be keeping an eye on that all day.

Former Nissan boss Carlos Ghosn will finally talk about his "escape" from Japan to Lebanon when he holds a press conference later today - and hopefully say how he did it.

And in the UK, Sainsbury's will reveal how it fared over the Christmas trading period. Will its sale growth surpass Morrisions which reported yesterday?

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Simon French, chief economist at Panmure Gordon, has been speaking to the Today programme about commodity prices amid rising tensions between the US and Iran.

He said that uncertainty meant that investors were moving to assets and currencies “traditionally seen as a safe haven”, such as gold or currencies like the Japanese Yen.

He added: “Let’s be really honest, nobody knows how this standoff between the US and Iran will evolve.

“And in that environment, where you’re concerned over the long-term economic implications, gold as a traditional store of value is something that investors look to.”

ReutersCopyright: Reuters

Dr James of Oxford Analytica says companies concerned about the US-Iran situation and the potential impact on their business should be looking at a number of areas.

"The first and foremost is definitely oil prices because that applies across the board," she says.

Oil prices jumped last week when the US assassinated Iranian General Qasem Soleimani in Baghdad and are up again today.

She says: "The question now is how is Iran going to retaliate for the killing of Soleimani and they are definitely going to retaliate. The regime needs to retaliate to prove its legitimacy.

"There are various things they could do. The Gulf and Gulf shipping is one possible area of focus. Another is actual oil installations within the Middle East and so people need to watch shipping insurance prices.

"Gulf stock markets are all down so that's a concerns for some businesses that have exposure but globally the question is are oil prices going to be sustained at a much higher level than we expected in 2020 and that really depends on what Iran decides to do."