Oil snapped four days of losses after an American warship downed an Iranian drone near the Strait of Hormuz, stoking concerns crude flows from the Middle East may be disrupted.

Futures rose as much as 1.9% in New York, paring its steepest weekly decline since the end of May. The U.S. “immediately destroyed” the drone that approached the USS Boxer, President Donald Trump said on Thursday at the White House. Iran could close the Strait of Hormuz but doesn’t want to do it because the waterway and the Persian Gulf are its lifeline, Foreign Minister Mohammad Javad Zarif said in an interview Wednesday.

Oil is still down about 7% this week as concerns about global demand eclipse fears about a cut to Middle East crude flows. Trump on Tuesday reiterated that he could impose additional tariffs on Beijing, while China’s economic growth slowed to the weakest pace in almost three decades in the second quarter and American fuel stockpiles unexpectedly expanded.

West Texas Intermediate for August delivery increased 55 cents, or 0.8%, to $55.75 a barrel on the New York Mercantile Exchange as of 7:41 a.m. in London after gaining as much as $1.06 earlier. The contract lost $1.48 to $55.30 on Thursday, the lowest close since June 19.

Brent for September settlement rose 81 cents to $62.74 a barrel on the ICE Futures Europe Exchange. It fell 2.7% to $61.93 on Thursday and is also set for the biggest weekly loss since the end of May. The global benchmark crude traded at a premium of $6.84 to WTI for the same month.

Source : Bloomberg