UK Markets open in 7 hrs 59 mins

Oil rises on US-Iran tensions: 'Iran made a very big mistake!'

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK

The price of oil is rising on Friday as tensions continue to escalate between the US and Iran.

US president, Donald Trump, ordered military strikes on Iran before changing his mind, according to the New York Times. It follows the downing of a US drone by Iranian forces on Thursday.

“Iran made a very big mistake!” Trump tweeted on Thursday.

Donald Trump reportedly ordered military strikes on Iran, then changed his mind. Photo: Jonathan Ernst/Reuters

Brent (BZ=F) was up 0.6% to $64.87 at 9.10am UK time, having been in the red around an hour earlier. Crude (CL=F) was up by 0.5% to $57.39.

Oil is rising amid reports Trump ordered strikes on Iran. Photo: Yahoo Finance UK

Tensions between the US and Iran have been escalating over the last two weeks, affecting the oil prices.

Last week two oil tankers were attacked in the Gulf of Oman near Iranian waters. The US accused Iran of being responsible for the attack, an accusation Iran denies. The US deployed 1,000 extra troops to the region earlier this week in response to what it called “hostile behaviour.”

Commercial airlines have also been avoiding the area. The US Federal Aviation Authority issued a ban on US carriers flying over Iranian airspace in the Persian Gulf on Thursday. Dutch carrier KLM (AF.PA) and Australian airline Qantas are both also rerouting planes to avoid the area, according to the Associated Press.

The area of tension — where the tankers were attacked and the US drone downed — is a critical passage for global oil trade. The Strait of Hormuz between Iran and Oman is the only route to the open ocean from the Persian Gulf. Traders fear that rising tensions could disrupt oil shipments and restrict supply.