Oil costs increased on Friday as tensions mulled again within the Middle East after a U.S. Navy ship shot an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.
Benchmark crude costs were still on track for their greatest weekly fall in seven weeks, having dropped sharply earlier in the week on hopes for relieving Middle East tensions as well as demand considerations and a decreasing U.S. storm impact.
Brent crude LCOc1 futures had been up 81 cents, i.e., 1.3%, at $62.74 per barrel by 0642 GMT, having soared to $63.32. Brent declined 2.7% on Thursday, falling for a fourth straight session and was prepared for a weekly drop of over almost 6%.
West Texas Intermediate crude CLc1 futures surged 59 cents, or 1.1%, at $55.89 a barrel, after hitting $56.36. They ended 2.6% lower in the earlier session and were gone for a weekly drop of over 6%.
Signs that the U.S. Federal Reserve will cut interest rates aggressively to support the financial system were also behind Friday’s gains, mentioned Stephen Innes, a managing associate at Vanguard Markets.
The US said on Thursday that their Navy ship had “destroyed” an Iranian drone in the Strait of Hormuz after the aircraft warned the vessel; however, Iran said it had no details about losing a drone.
Also on Thursday, two influential Federal Reserve officers sharpened the public case for appearing to support the U.S. financial system, reviving bets the central bank could deliver a double-barreled rate of interest cut this month.
The International Energy Agency (IEA) is decreasing its 2019 oil demand growth prediction to 1.1 million barrels a day (bpd) from 1.2 million bpd previously attributable to a slowing global economy amid a U.S.-China trade conflict, its executive director said on Thursday.