President Donald Trump has said on Thursday that the United States Navy has shot down an Iranian drone in the Strait of Hormuz in the latest show of force between Iran and the United States, according to CNBC.
Oil prices were initially down on the day shortly following the announcement, with Brent crude trading down 1.93% at $62.43, and WTI trading down 1.97% at $55.66 on the day, despite the increased tensions.
Earlier in the day, new developments in the missing tanker in the area brought to light, according to Iran, that it had seized a small vessel over the weekend that it had suspected of smuggling oil. The US demanded that it immediately release the vessel, adding that it would work “aggressively” to keep the world’s most critical oil waterway a safe passage for all.
The USS Boxer, an amphibious assault ship, is part of US efforts to increase its presence in the area to keep order in the Persian Gulf. According to President Trump, the ship fired on the drone and ultimately destroyed it.
“We want to make sure that we assure allies in the region and to ensure freedom of navigation and free flow of commerce,” Colonel Fridrik Fridrikson of the 11th Marine Expeditionary Unit said prior to the incident, according to Reuters.
The US has publicly blamed Iran for attacks on two oil tankers off the coast of Oman—which Iran has denied. Iran has threatened the UK regarding the seizure of an Iranian ship that was thought to be violating sanctions on Syria, and has been defiant in the face of sanctions on its oil at the hand of the United States.
Iran’s oil exports fell to 400,000 barrels per day in May, down from more than 2.5 million bpd at its high in April 2018.
By Julianne Geiger for Oilprice.com
More Top Reads from Oilprice.com:
- Mexico Confirms Major Tax Cut For PEMEX
- What’s Behind The Drop In Renewable Spending?
- Oil Falls Back As Iran Risk Factor Fades