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Oil Prices Rally On Geopolitical Tensions

Oil prices jumped around 3 percent on Thursday after a U.S. military surveillance drone has been shot down by Iranian forces while flying over the Strait of Hormuz.

Benchmark Brent crude jumped 2.6 percent to $63.41 a barrel, while U.S. West Texas Intermediate crude futures were up 3 percent at $55.58 a barrel.

Investors fretted about a military confrontation between Tehran and Washington after Iran's elite Revolutionary Guard (IRGC) force said it had shot down an "intruding American spy drone".

U.S. officials said the drone was in international territory at the time. Press TV reported the downed drone was a US-made RQ-4 Global Hawk, while the U.S. official said it was a MQ-4C Triton.

Oil prices also remain supported by a combination of factors such as a larger-than-expected drawdown in U.S. inventories, the prospect of prolonged supply restraint by producer group OPEC and its allies and expectations of a worldwide wave of central bank stimulus to boost slowing growth.

Data released by the U.S. Energy Information Administration on Wednesday showed that crude stockpiles in the U.S. declined by about 3.1 million barrels last week, nearly three times up from analysts' forecast for a 1.1 million barrels drop.

After weeks of disagreements, the Organization of the Petroleum Exporting Countries and allies including Russia have agreed this week to meet on July 1-2 to decide whether to extend the oil production cuts beyond June.

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