The price of oil initially increased more than 4% when news of the US evacuation broke, in anticipation of regional insecurity potentially leading to supply problems. Around 2,500 US troops are based in Iraq, according to the defence department.

The United States is preparing to evacuate its Iraqi embassy due to heightened security risks in the region, three U.S. and two Iraqi sources said on Wednesday while a U.S. official said military dependents could also leave Bahrain.

BAGHDAD/WASHINGTON (Reuters) -The United States is preparing a partial evacuation of its Iraqi embassy and will allow military dependents to leave locations around the Middle East due to heightened security risks in the region, U.S. and Iraqi sources said on Wednesday.