New U.S. Sanctions Most Likely to Hit Metals Sector: Iran Update

(Bloomberg) -- Iran on Wednesday fired missiles at airbases jointly used by the U.S. and Iraq in retaliation for the killing of General Qassem Soleimani, roiling financial markets and disrupting air traffic but causing no casualties. President Donald Trump promised additional sanctions on Iran, but said Tehran appears to be refraining from additional attacks.

With no Americans killed, expectations of an immediate escalation in the oil-exporting region appeared to recede. Though retribution had been expected for the deadly drone strike, Iraq said it had received verbal notice from the Iranians prior to the strikes. A U.S. official said the Iranians were likely aiming to miss.

Airlines changed routes to avoid the conflict zone, and the U.S. Federal Aviation Authority restricted flights over the Persian Gulf.

Here is a rundown of major events in Iraqi local time since Tuesday:

Key developments:

Iran retaliates against U.S. in rocket attack on Iraqi basesCommodities move on the news, stocks pare initial losses and oil shippers raise Middle East ratesAir Canada, Malaysia Airlines joint list of operators changing routesTurkish and Russian Presidents meet in Istanbul

New U.S. Sanctions Most Likely to Hit Metals Sector (2:35 a.m.)

President Donald Trump on Wednesday vowed more sanctions on Iran as part of his “maximum pressure” campaign against the Islamic Republic. Those penalties are likely to target key regime figures and the country’s metals sector, according to a person familiar with U.S. plans to keep squeezing Iran’s economy following the killing of Soleimani.

The sanctions will likely be aimed at non-oil sectors of the Iranian economy and fit into a previously disclosed administration plan to choke off other sources of revenue now that the U.S. has clamped down on the country’s oil exports, said the person, who asked not to be identified discussing private deliberations.

Pentagon Says Iran Fired With Intent to Kill Troops (1:50 a.m.)

U.S. Joint Chiefs of Staff Chairman Mark Milley said Iran targeted personnel with intent to kill in its strike on two bases in Iraq, and that it’s too early to tell what the Islamic Republic will do next.

Defense Secretary Mark Esper, briefing reporters at the Pentagon alongside Milley, said 16 Iranian missiles were launched from three sites in the country and that a U.S. warning system gave American forces in Iraq time to protect personnel. Esper said he expects Shiite militias to still target U.S. forces.

The Pentagon chief also said he has no information on whether Iran shot down the Boeing jet that crashed near Tehran the same night as the missile barrage in Iraq.

Two Republicans Rip Administration Over Briefing (12:55 a.m.)

Republican Senators Mike Lee and Rand Paul, two libertarian-leaning lawmakers, ripped the administration’s briefing on its strike against an Iranian official as inadequate and said the administration must get authorization from Congress before taking any further military action.Lee, of Utah, called it the worst briefing on military affairs he’s heard since coming to Congress and said it was “insulting” to lawmakers who wanted to understand President Donald Trump’s strategy. As a result, he said he’ll back a Democratic-sponsored resolution to limit Trump’s options to take military action.

“That briefing changed my mind,” Lee said. “After today, every time they pull a stunt like this, I’m willing to consider and introduce any and every war powers act resolution.”

Paul, of Kentucky, said he considers himself a Trump supporter but that debate about a president’s authority to wage war is bigger than this administration or this president. He said he also would vote for the resolution sponsored by Virginia Democratic Senator Tim Kaine that would require the president to cease military actions against Iran unless authorized by Congress or in response to an imminent threat.Their remarks stood in stark contrast to the reactions of most other Republicans following a briefing by Secretary of State Michael Pompeo and other administration officials. Senator James Risch of Idaho called it “one of the best briefings” he’s gotten at the Capitol.

Republicans, Democrats Feud Over Soleimani Threat (11:10 p.m.)

Republicans and Democrats in the U.S. Congress had starkly different interpretations of the classified briefing from Trump administration officials to justify the strike that killed Soleimani.

The justification was “sophomoric,” according to House Foreign Affairs Committee Democrat Gerald Connolly. He said the explanation centered on the president’s constitutional authority to respond to imminent threats and the 2002 Authorization for the Use of Military Force in Iraq.

“No case was made for imminence,” Connolly said. “No case was made for thinking this through. I leave this briefing more troubled than when I went in.”

Representative Mark Meadows, a Republican from North Carolina, said he was satisfied by the administration’s justification, backed by intelligence presented by CIA Director Gina Haspel. He said Haspel’s information was exhaustive and contained “numerous” multiple potential threats and reasons why the action “was necessary.”

Meadows said Soleimani will “not be easily replaceable,” and “some of his operational abilities will take months if not years to replace.”

Trump Says Iran Appears to Be Standing Down (7:31 p.m.)

Trump said Iran appears to be refraining from additional strikes against U.S. targets, calling it a “good thing” for both nations and the world.

“Iran appears to be standing down, which is a good thing for all parties concerned,” Trump said in an address from the Grand Foyer in the White House.

“The American people should be extremely grateful and happy. No Americans were harmed” in the attacks, Trump said.

Trump said he would impose additional economic sanctions on Iran and would keep the measures in place until the Islamic Republic becomes less bellicose toward the U.S. He said he would ask NATO to become more involved in the Mideast, without elaboration.

Trump to Give Iran Address at 11 a.m. (6:34 p.m.)

Trump will speak to the American people at 11 a.m. Washington time from the White House on Wednesday to address the confrontation with Iran, the administration said.

The speech marks the president’s most significant foreign policy remarks of his tenure as tensions in the region simmer.

In the hours after the Iranian strikes, Trump sent a message of reassurance, saying in a tweet, “All is well!”

Putin and Erdogan Urge De-Escalation (6:15 p.m.)

Russia’s President Vladimir Putin traveled to Istanbul on Wednesday to meet with his Turkish counterpart Recep Tayyip Erdogan. They issued a joint statement urging the U.S. and Iran “to act with restraint, with common sense and with priority given to diplomatic means.”

“We believe that the exchange of strikes and the use of force by either side do not contribute to the search for solutions to the complex problems of the Middle East and lead to a new round of instability, not responding to anyone’s interests,” they said in the statement.

No American Casualties in Iranian Strike (2:55 p.m.)

There were no American casualties in Iranian missile strikes targeting bases in Iraq that hosted U.S. and Iraqi soldiers, a U.S. official said, asking not to be named because the information hasn’t yet been made public.

The attacks used guided missiles and in this instance, Iran appeared to have intentionally aimed the strikes away from Americans on the base, the official said.

No British Troops Injured, Says Johnson (3:05 p.m.)

Prime Minister Boris Johnson said no British troops had been injured in last night’s attack. Answering questions in Parliament, he urged de-escalation in the region, but added that the question of the legality of killing Soleimani was one for the U.S.

“The U.S. has a right to protect its bases and its personnel,” Johnson said. Pushed by opposition Labour Leader Jeremy Corbyn, Johnson said Soleimani had armed terrorist groups, including those who attacked British soldiers. “That man had the blood of British soldiers on his hands,” he said.

Tanker Majors Suspend Transit Through Straits of Hormuz: DJ (1:26 p.m.)

Petrobras, Bahri, other tanker companies suspend sailing through the Straits of Hormuz, Dow Jones reported, citing unidentified people familiar with the matter. The decision comes after the Iranian strike raised concerns of a military escalation in the oil-exporting region.

Iraq Says Got Verbal Notice From Iran Prior to Its Attack (1:16 p.m.)

The iraqi Prime Minister’s office said it got verbal notice from Iran prior to its attack. Iran said it would only target U.S. positions and no causalities were reported, it said in a statement on Twitter.

The “commander in chief has continued to follow developments from the beginning of the attack until this hour and is making necessary internal and external contacts in an attempt to contain the situation and not enter into open war where Iraq and the region will be among the first victims,” it said.

Lufthansa Suspends Flying Over Iran, Iraq Airspace (11:23 a.m.)

Lufthansa has suspended flights over Iraqi and Iranian airspace in the wake of the missile strikes, a spokesman said by phone. Lufthansa also canceled a 1330 CET flight from Frankfurt to Tehran.

Iran’s Zarif Says He Has No Statistic on Attack Fatalities (11:17 a.m.)

Iranian Foreign Minister Jawad Zarif doesn’t have any statistics on fatalities in the Iranian attacks on U.S. targets in Iraq, he told reporters in comments broadcast on TV. Zarif said he’s sent a message to the Americans “immediately after the attack” but did not elaborate on its contents.

Iran Gave U.S. ‘Crushing Response,’ Supreme Leader Says (10:42 a.m.)

Iranian Supreme Leader Ayatollah Ali Khamenei said in a televised address on Wednesday that his country had given the U.S. a “crushing response” to the killing of Soleimani and called for an end to the U.S. presence in the region.

Turkey Hints Readiness for U.S.-Iran Mediation as Putin Visits (10:53 a.m.)

Turkey indicated it’s willing to mediate between the U.S. and Iran as President Recep Tayyip Erdogan prepares to meet Russian President Vladimir Putin in Istanbul to discuss escalating tensions in the Middle East and North Africa.

“Turkey is one of few countries and probably the most important one that can speak both with the U.S. and Iran,” Erdogan spokesman Ibrahim Kalin said after a cabinet meeting late Tuesday.

Turkish Foreign Minister Mevlut Cavusoglu will visit Iraq on January 9 “within the context of our intensified diplomatic efforts to alleviate the escalated tension in the aftermath of recent developments in the region,” the ministry said in a statement.

Iraq says 17 missiles hit Ayn al-Asad base (9:13 a.m.)

A Facebook account belonging to the Iraqi prime minister’s office says 22 missiles entered Iraqi airspace early Wednesday, hitting “coalition locations.” It says there were no casualties among the Iraqi forces. Earlier, U.S. officials said Iran fired 15 missiles in total.

Gold Tops $1,600 as Iranian Attacks Might Invite U.S. Action (07:58 a.m.)

Oil and gold both rose while equities fell immediately on the news that Iran launched missiles against American targets as investors looked for a safe haven. But stocks in Asia pared losses and crude came off highs after Iran assured its strike didn’t mean it was seeking war, and President Trump declared, “All is well!”

Gold surged above $1,600 an ounce for the first time in more than six years but gains moderated as calm returned.

U.A.E. Calls for De-escalation after Iran hits U.S. Targets (7:0.8. a.m.)

U.A.E. hopes that there is no further escalation in the region, Energy Minister Suhail Al Mazrouei told reporters in Abu Dhabi.

“We are hoping the wisdom of both sides will de-escalate the tension,” Al Mazrouei said, adding that he’s not concerned about oil supplies.

Air Canada Joins Other Operators in Route Change Over Middle East (06:57 a.m.)

Air Canada said it was altering flight routes into and over the Middle East, joining Malaysia and Singapore Airlines as tensions flared.

Boeing 737 Jet Crashes in Iran to ‘Technical Issue’ (05:33 a.m.)

A state-controlled news agency said a Boeing 737 Jet crashed in Iran shortly after takeoff due to a “technical issue.”

All 176 passengers and crew perished.

U.S. Restricts Flights Over Persian Gulf (5:05 a.m.)

U.S. aviation regulators issued new restrictions barring civilian flights over Iraq, Iran, the Persian Gulf and the Gulf of Oman.

The effect of the restrictions wasn’t immediately clear because the Federal Aviation Administration had been prohibiting U.S. carriers from flying over most of those areas.

“The FAA will continue closely monitoring events in the Middle East,” the agency said in a statement. “We continue coordinating with our national security partners and sharing information with U.S. air carriers and foreign civil aviation authorities.”

Key Stories:

Iran Retaliates With Missile Strike on U.S.-Iraqi BasesStocks Pare Losses as Iran Says Attack Concludes: Markets WrapIran’s Retaliation Offers Room for Trump to Calm TensionsGlobal Market Reaction to Iran Rocket Attack in Four ChartsIran Strike Renews Fight Over Who Has Say on U.S. War: QuickTake

--With assistance from Arsalan Shahla, Richard Bravo, Nikos Chrysoloras, Thomas Penny, Jennifer Jacobs, Todd Shields, Nick Wadhams, Justin Sink, Kyunghee Park, Alan Levin, Kartikay Mehrotra, Olga Tanas, Josh Wingrove, Glen Carey and Tony Capaccio.

To contact the reporter on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, Joshua Gallu

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