U.S. oil jumped on Thursday after Iran shot down a U.S. military drone, prompting President Donald Trump to blast Tehran on Twitter and fueling concerns of a conflict between the two countries.
U.S. West Texas Intermediate crude settled up $2.89, or 5.4%, to $56.65 a barrel after surging as much as 6% around 10 a.m. ET. Brent crude, the global benchmark, was up $2.79 — a 4.5% increase — at $64.61 a barrel.
The strained relationship has sent crude prices soaring since more than 20% of the world’s oil output comes from the Middle East. Any threats to the free flow of oil through key chokepoint the Strait of Hormuz could dampen crude supplies.
“If we didn’t have the U.S. resource endowment, oil would absolutely be over $100. Pre-Permania, oil would be above $100” says RBC head of global commodities strategy, Helima Croft.
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