Oil prices rose Thursday by more than 3 percent to above $63 a barrel after Iran said it destroyed a US drone near the Strait of Hormuz.
Expectations that the US Federal Reserve could soon cut interest rates, stimulating growth in the world’s largest oil-consuming country, and a drop in US crude inventories, also provided support to prices.
Brent crude was up $1.40 at $63.22 a barrel, which US West Texas Intermediate crude rose $1.54 to $55.30.
Worries about slowing economic growth and a trade dispute between the US and China has recently pulled oil lower in recent weeks. In April, Brent reached a 2019 high of $75.
The possibility of additional rate cuts could prove the more significant factor for oil should the Iran-US tension not escalate, Petromatrix analyst Olivier Jakob told Reuters.
“The Fed and the cutting of rates is something that will provide more substantial support,” he said.
Also pushing oil higher Thursday was a decline in American crude inventories and the prospect of an extended supply restraint by producer group OPEC and its allies.
Last week, US crude stocks fell by 3.1 million barrels, more than analysts expected, according to the Energy Information Administration.