Brent oil has increased above $65 per barrel and was set to achieve a 6% gain this week on fears of a military attack by the US on Iran, thereby disrupting flows from the Middle East.
Brent crude edged up $1.02 at $65.47 a barrel, while US West Texas Intermediate crude rose 58 cents at $57.63 a barrel, Reuters reported.
Officials from Iran told Reuters that US President Donald Trump sent a message to Tehran warning that a military attack on Iran was imminent.
Jefferies analyst Jason Gammel was quoted by Reuters as saying: “Crude prices are spiking on increased Middle East tensions after Iran shot down a US drone in what the US claims is international airspace.”
As reported by the New York Times, Trump had approved military attacks against Iran and later on pulled back from launching them. Tensions are increasing as US sanctions on Iran have reduced oil exports from OPEC’s third largest producer drastically. Washington has also blamed Tehran for a series of attacks on two oil tankers in the Gulf.
FGE Energy said in a note: “There is no doubt that a severe disruption to the transit of oil through this vulnerable route would be extremely serious.”
Oil prices are gaining some support as Beijing and Washington plan to resume talks to resolve a trade tariff dispute that has hit prospects of economic growth. In recent weeks, worries regarding weak economic growth and a trade dispute between the US and China led to a fall in oil prices.