2019.07.1906:22:00UTC+00Oil Prices Rebound On Gulf Tensions

Oil prices rose sharply on Friday after the U.S. Navy shot down an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.

President Donald Trump told reporters the USS Boxer took defensive action after the drone closed to within 1,000 yards of the amphibious assault ship and ignored multiple calls to stand down.

The downing of the Iranian drone comes a month after the Islamic Revolutionary Guards Corps shot down an unmanned U.S. surveillance drone.

Benchmark Brent crude jumped 1.8 percent to $63.05 after falling 2.7 percent on Thursday. West Texas Intermediate crude futures were up 1.4 percent at $56.05 per barrel after ending 2.6 percent lower in the previous session.

Oil prices also received some support after comments from a top Federal Reserve official suggested the U.S. central bank will cut rates aggressively to support the economy as the U.S.-China trade war drags.

The International Energy Agency (IEA) is reducing its 2019 oil demand forecast to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, its executive direction said on Thursday.