- 20th June 2019
- Posted by: Hakeem
- Categories: FOREX MARKET ANALYSIS, International, POLITICS
Trump took to Twitter Thursday morning to criticize what U.S. officials say was Iran’s attack on a U.S. surveillance drone earlier in the day, saying that Tehran made a “very big mistake.”
The drone downing came amid a standoff between Washington and Tehran, stemming from the Trump administration’s decision to withdraw from the 2005 Iran nuclear agreement. Prior to the drone attack over the Strait of Hormuz, the U.S. accused Iran of recent attacks on oil tankers in the Persian Gulf region.
The strained relationship has sent crude prices soaring since more than 20% of the world’s oil output comes from the Middle East. Any threats to the free flow of oil through key chokepoint the Strait of Hormuz could dampen crude supplies.
Also supporting oil were expectations that the U.S. Federal Reserve could cut interest rates at its next meeting, stimulating growth in the world’s largest oil-consuming country.
“If we didn’t have the U.S. resource endowment, oil would absolutely be over $100. Pre-Permania, oil would be above $100” says RBC head of global commodities strategy, Helima Croft.
“We have a drone shot down, we have President Trump now tweeting Iran made a big mistake. I think the market may be waking up to the degree of risk entailed by these incidents,” Croft said.