The prices of oil futures jumped on Tuesday after it was reported that the United States has downed an Iranian drone in the Arabian Sea. According to a US official who allegedly spoke to Reuters, the military shot down an Iranian drone that came too near to USS Abraham Lincoln, a Navy aircraft carrier stationed in the Arabian Sea. West Texas Intermediate (WTI) for March’s deliveries soared by 2.29% at 12:19 pm ET to $63.64 per barrel. A minute later, Brent for April’s settlements increased by 2.03% to $67.38 per barrel.
A US F-35C warplane shot down the drone in self-defense as the unmanned aircraft “aggressively approached” the USS Abraham Lincoln with “unclear intent,” US Central Command said in a statement on Tuesday. No American service members were harmed during the incident, and no US equipment was damaged, CentCom said. Oil prices spiked to a session-high on the report as investors weighed the risk of a broader escalation in the Middle East, which provides about a third of the world’s crude. The move came just hours after an oil tanker that’s part of a US-military fuel procurement program was hailed by small armed ships in the Strait of Hormuz off Iran’s coast, underscoring renewed risks to maritime traffic in the region. The drone incident comes after numerous threats from President Donald Trump about striking Iran over the suppression of recent protests there. It interrupts a flurry of diplomatic activity in recent days after Trump on Monday signaled there could be a new Iran nuclear deal, while warning that “bad things would happen” if talks don’t yield anything. Iranian Foreign Minister Abbas Araghchi has said the Islamic Republic is ready for diplomacy but urged restraint in “threats, intimidation or pressure” from the US. The White House declined to comment on the US shooting down the Iranian drone and referred questions to the Defense Department. “Continued Iranian harassment and threats in international waters and airspace will not be tolerated,” US Central Command said in its statement. “Iran’s unnecessary aggression near US forces, regional partners and commercial vessels increases risks of collision, miscalculation, and regional destabilization.”