New York: Oil snapped four days of losses after the US said it downed an Iranian drone near the Strait of Hormuz, stoking concern crude flows from the Middle East may be disrupted.
Futures rose as much as 1.9 per cent in New York, paring their steepest weekly decline since the end of May. A US warship “immediately destroyed” the drone that approached the USS Boxer, President Donald Trump said on Thursday at the White House. Iran’s Deputy Foreign Minister Seyed Abbas Araghchi denied his country lost a drone.
Oil is still down about 7 per cent this week as fears of waning demand eclipse concern that Middle East supplies could be curtailed. The US-China trade spat persists, with Trump reiterating Tuesday that he could impose additional tariffs on China, where quarterly economic growth has slowed to the weakest pace since at least 1992. Meanwhile, US fuel stockpiles unexpectedly expanded.
“The retreat this week is quite severe when you consider that you have all these headlines from the Gulf,” said Olivier Jakob, managing director at Petromatrix GmbH. “There’s really some concern about the global balances, and to reverse that you will need to have the impression that the trade wars are over.”
West Texas Intermediate for August delivery increased 59 cents, or 1.1 per cent, to $55.89 a barrel on the New York Mercantile Exchange as of 9.51am London time.
Brent for September settlement rose 81 cents to $62.74 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $6.75 to WTI for the same month.
The Iranian drone was a threat to the US ship and its crew, Trump said, as he called on other nations to protect their vessels as they go through Hormuz. Iranian Foreign Minister Mohammad Javad Zarif said earlier this week that his country could close the strait but doesn’t want to, because the waterway and the Arabian Gulf are its “lifeline.”
Trump last week complained that China wasn’t living up to its promise of increased purchases of American agricultural goods. Disagreements over key demands from Trump and his Chinese counterpart, Xi Jinping, have raised doubts about whether the two nations will actually return to the negotiating table.