Investing.com – Driven by simmering tensions between the U.S. and Iran, oil prices continued to trade higher during morning trade in Asia Friday hours after soaring to their highest level for the month.
U.S. WTI crude futures were up 0.47% to $57.40 by 8:36 PM ET (00:30 GMT). Brent crude, traded in London, was up 0.42% to $64.78. The spread between the two key benchmarks is the lowest it has been since April.
Iran admitted shooting down a U.S. drone on Thursday and President Donald Trump has tweeted that “Iran made a very big mistake”.
Last week, two oil tankers were attacked near the Strait of Hormuz, which is a key route for oil out of the Middle East. The U.S. has blamed these attacks on Iran and announced plans to send 1,000 more troops to the region.
WTI oil rose as much as 6% during day trading in the U.S. as investors considered the possibility that a conflict with Iran could disrupt the global supply of oil. Since the attacks on the tankers, oil prices have risen about 9%.
Oil prices were also supported by drops in crude inventories in the U.S., as well as expectations that the US Federal Reserve would move to cut interest rates later this year.
“It’s a confluence of events: there’s a looming easing cycle that is going to hit the dollar and prop up commodity prices, and there are also the tensions with Iran,” John Kilduff, a partner at Again Capital in New York told Reuters.
Kilduff believes prices could go even higher if tensions continue to mount, although Trump seemed to suggest on Thursday that Iran’s actions could have been accidental.
Prices also climbed on Thursday after the U.S. Energy Information Administration reported that crude oil inventories fell by 3.11 million barrels in the week to June 14.