Crude rises on US–Iran tensions, broader selloff

LONDON: Oil prices rose on Wednesday after the United States shot down an Iranian drone and armed Iranian boats approached a U.S.-flagged vessel, reviving fears of escalation ahead of planned talks.
Brent crude futures were up 46 cents, or 0.7%, at $67.79 a barrel by 1034 GMT. U.S. West Texas Intermediate was up 52 cents, or 0.8%, at $63.73.
Both benchmarks have seesawed this week on alternating headlines about possible de-escalation talks and concerns over disruption to oil flows through the Strait of Hormuz. A broader selloff in equities – which often move in tandem with oil – limited gains.
“Oil would be lower without Middle Eastern sabre-rattling,” analysts at PVM said in a note.
The U.S. military said it shot down an Iranian drone on Tuesday that “aggressively” approached a U.S. aircraft carrier in the Arabian Sea. Separately, maritime sources and a security consultancy said Iranian gunboats approached a U.S.-flagged tanker north of Oman. The U.S. and Iran are due to hold talks there on Friday, a regional official said.
Several OPEC members – including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq – export most of their crude via the Strait of Hormuz, mainly to Asia.
Oil also drew support from industry data showing a sharp drop in U.S. crude stockpiles. Inventories fell by more than 11 million barrels last week, sources said, citing figures from the American Petroleum Institute. Official data from the U.S. Energy Information Administration is due at 1530 GMT; analysts polled by Reuters were expecting a rise in crude inventories.
On Tuesday, oil prices were also supported by a U.S.–India trade agreement that raised hopes of stronger global energy demand, while continued Russia attacks on Ukraine added to concerns that Moscow’s oil would remain under sanctions for longer.