- Global oil prices rose after Iran on Thursday downed an American spy drone over the Strait of Hormuz.
- A third of all shipped oil passes through the critical waterway, which is off the coast of Iran.
- Prices spiked even higher after President Trump tweeted Thursday: "Iran made a very big mistake!"
Global oil prices jumped after Iran on Thursday shot down a U.S. spy drone over the Strait of Hormuz, stoking concerns about an escalating conflict between the two countries. Prices spiked even higher -- up more than 5% in mere hours -- after President Trump tweeted "Iran made a very big mistake!"
The drone shooting follows last week's attack on two oil tankers near the Gulf of Oman. The U.S. blames Iran for the attack on the ships but Tehran denies it was involved. The attacks also come against the backdrop of President Donald Trump's decision last year to withdraw from a nuclear deal with Iran.
The price of Brent crude, the global benchmark, rose nearly 4% to almost $65, according to Bloomberg, while U.S. West Texas Intermediate crude increased 5.5% to nearly $57, according to Bloomberg
The surge in oil prices is not certain to drive up gasoline costs in the U.S., which tend to peak just before summer. The price of crude accounts for roughly 60% of the costs that Americans pay to fill up at the pump, according to AAA. The national average cost for a gallon of unleaded regular gasoline has fallen two cents this week to $2.66.
U.S. officials confirmed to CBS News that a high altitude drone on a surveillance mission over the Strait of Hormuz was hit by an Iranian surface-to-air missile in what they say was international airspace. Iran said its elite Revolutionary Guard shot down an RQ-4 Global Hawk drone as it flew in airspace claimed by Iran.
A third of all shipped oil passes, which is off the coast of Iran. Officials in Tehran have often threatened to choke off the flow of oil moving through the critical waterway whenever there is a dispute with the U.S. or its regional allies, such as Saudi Arabia and the United Arab Emirates.
"Iran and the U.S. are still more likely to avoid war in 2019, given powerful political incentives on both sides, but this course will become harder to maintain as each side ramps up pressure on the other," analysts with Eurasia Group said in a report earlier this week ahead of Thursday's drone incident.