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Oil jumps after US Navy hits Iranian drone

Oil jumps after US Navy hits Iranian drone

Mubasher: Oil prices climbed on Friday as tensions erupted again in the Middle East after a US Navy ship hit an Iranian drone in the strategic Strait of Hormuz, Reuters reported.

In addition, expectations that the Federal Reserve would reduce interest rates to boost the US economy also gave a push to crude prices.

By 7:52 am GMT, global benchmark Brent futures jumped by 1.21% to $62.68 per barrel (pb), while US Nymex crude futures rose by 0.94% to $55.82 pb.

That said, both contracts were heading for their biggest weekly loss since seven weeks, having endured a steep drop earlier in the week on the back of prospects of easing anxieties regarding the situation in the Middle East and worries over demand growth waning impact of a US tropical storm.

Both Brent and Nymex were on track to record a weekly decline of more than around 6%.

Washington on Thursday announced that a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global oil flows, after the aircraft jeopardised the vessel, yet Tehran denied any knowledge of losing a drone.

Moreover, two senior Federal Reserve officials paved further for action to shore up the economy, re-igniting wagers that the central bank could unleash a half-point interest rate cut this month.

“The Fed backstop and the report of the US Navy shooting down an Iranian drone are providing a modicum of support for oil markets amidst a very bearish landscape,” Vanguard Markets managing partner Stephen Innes was quoted by Reuters.