Shutterstock photo

Romania is closer to a $3.9 billion deal for Raytheon's ( RTN ) Patriot missile-defense system amid a surge in demand for U.S. weapons overseas, helping the stock break out into buying territory

[ibd-display-video id=2326967 width=50 float=left autostart=true] The NATO partner signed a Letter of Offer and Acceptance for the Patriot Wednesday after announcing plans to buy it in April.

The letter allows contract negotiations between Romania and the U.S. to begin. The State Department must notify Congress of all weapons sales to foreign partners, and Congress approves any final deal.

The deal would include seven Patriot Configuration 3+ units, 56 Patriot MIM-104E Guidance Enhanced Missile-TBM missiles and 168 Patriot Advanced Capability-3 Missile Segment Enhancement missiles.

The Patriot is useful against conventional weapons. It has a range of just 12 miles and works by intercepting missiles in the low atmosphere in their final approach toward the target, or terminal phase.

Earlier this month the State Department approved the potential sale of four Patriot systems to Poland.

Raytheon shares closed up 1.4% at 191.15 on the stock market today, clearing a 190.35 entry point. Lockheed Martin ( LMT ) and Boeing ( BA ), which also produce missile-defense systems, rose 0.1% and 2.8%, respectively. (Lockheed also makes interceptors for the Patriot system.) Northrop Grumman ( NOC ), whose acquisition of Orbital ATK ( OA ) will give it a greater presence in missile defense, added 0.2%.

IBD'S TAKE:Lockheed Martin, Raytheon and other defense stocks are forming new bases and are poised for breakouts as tensions rise in the Middle East, Europe and in the Pacific.

Heightened global tensions have increased the demand for U.S. arms abroad. The Defense Security Cooperation Agency said weapons sales in fiscal year 2017, which ended in September, rose nearly 25% to $41.93 billion.

"This positive sales trend isn't surprising as the United States is the global provider of choice for Security Cooperation," Lt. Gen. Charles Hooper, DSCA director, said in a statement. "We deliver not only the most effective defense systems to our partners, but we also ensure a 'Total Package' approach that includes the provision of training, maintenance, and sustainment, to support full spectrum capability for our partners.

The Middle East has seen heavy dealmaking in recent years, particularly from Saudi Arabia. In May, President Trump announced $110 billion in arms deals when he visited the kingdom.

Lockheed said in a release that Saudi Arabia wants to buy more than $28 billion in "integrated air and missile defense, combat ship, tactical aircraft and rotary wing technologies and programs."

Boeing deals included a Chinook helicopter and support services, guided-weapons systems and the P-8 reconnaissance plane.

RELATED:

Missed Lockheed, Raytheon Buy Points? Here's A Second Chance

Will Congress OK Saudi Orders For Boeing, Raytheon Weapons?

Defense And Aerospace Stocks To Watch And Industry News

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.