Finance
Oil prices climb 2% after US shoots down Iranian drone, worries about armed boats
Published by Global Banking & Finance Review®
Posted on February 3, 2026
4 min readLast updated: February 3, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on February 3, 2026
4 min readLast updated: February 3, 2026
Oil prices are stable as U.S.-Iran tensions ease and the dollar strengthens. Brent and WTI crude see minor gains, while OPEC+ holds production steady.
By Scott DiSavino
NEW YORK, Feb 3 (Reuters) - Oil prices climbed about 2% on Tuesday after the U.S. shot down an Iranian drone approaching a U.S. aircraft carrier and armed boats approached a U.S.-flagged vessel in the Strait of Hormuz, stoking concerns talks aimed at de-escalating U.S.-Iran tensions could be disrupted.
Brent futures rose $1.03, or 1.6%, to settle at $67.33 per barrel, while U.S. West Texas Intermediate crude rose $1.07, or 1.7%, to settle at $63.21.
On Monday, both crude benchmarks dropped more than 4% after U.S. President Donald Trump said Iran was "seriously talking" with Washington.
But on Tuesday, the U.S. military shot down an Iranian drone that "aggressively" approached the Abraham Lincoln aircraft carrier in the Arabian Sea.
In the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, a group of Iranian gunboats approached a U.S.-flagged tanker north of Oman, maritime sources and a security consultancy said on Tuesday.
OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia.
"The diplomatic effort to avoid a U.S. military strike in Iran is unravelling ... it would appear (elements in Iran) are trying their best to sabotage the process right now," Bob Yawger, director of energy futures at Mizuho, said in a note.
Iran was the third-biggest OPEC crude producer in 2025, according to U.S. Energy Information Administration data.
"Iran’s significance within oil markets extends well beyond its own production profile. The country’s geopolitical weight is rooted in its strategic location, its influence over regional security dynamics, and its capacity to disrupt critical energy infrastructure and transit routes," said Jorge Leon, senior vice president and head of geopolitical analysis at consultancy Rystad Energy.
Regional power United Arab Emirates urged Iran and the U.S. on Tuesday to use the resumption of nuclear talks this week to resolve a standoff that has led to mutual threats of air strikes.
Iran, meanwhile, is demanding that talks with the U.S. this week be held in Oman not Turkey, and that the scope be narrowed to two-way talks on nuclear issues only, casting doubt on whether the meeting will go ahead as planned.
RUSSIA AND INDIA
Earlier on Tuesday, oil prices had gained support as a trade agreement between the U.S. and India raised hopes that global energy demand could increase, while Russia's continued attacks on Ukraine boosted worries Moscow's oil would remain sanctioned for longer.
Trump's move to slash tariffs on Indian imports lifted sentiment among exporters and policymakers even as details of the agreement remained scant.
Trump announced a trade deal with India on Monday to cut tariffs to 18% from 50% in exchange for New Delhi halting Russian oil purchases and lowering trade barriers. India is one of the world's biggest economies and oil importers.
While the deal might appear bullish for oil, "the near-term impact will likely be on a further discount on Russian crude barrels that is unlikely to affect exit of shadow cargoes into the world market," energy advisory firm Ritterbusch and Associates said.
In Ukraine, President Volodymyr Zelenskiy accused Russia on Tuesday of exploiting a U.S.-backed energy truce to stockpile munitions, and using them to attack Ukraine a day before peace talks.
The overnight attack knocked out heating in cities including the capital Kyiv as Ukrainian negotiators headed to Abu Dhabi for a second round of U.S.-brokered trilateral talks set for Wednesday and Thursday.
Any delay to ending the war in Ukraine would likely keep oil prices elevated by leaving sanctions limiting Russia's oil exports in place following Moscow's 2022 invasion.
Russia was the world's third-biggest crude producer behind the U.S. and Saudi Arabia in 2025, according to EIA data.
(Reporting by Scott DiSavino in New York, Robert Harvey and Stephanie Kelly in London, Anushree Mukherjee in Bengaluru and Trixie Yap in Singapore; Editing by Nia Williams and Nick Zieminski)
OPEC, or the Organization of the Petroleum Exporting Countries, is a group of oil-producing countries that coordinates and unifies petroleum policies to ensure the stabilization of oil markets.
Crude oil is a natural, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. It is used to produce fuels and other products.
The dollar index measures the value of the U.S. dollar relative to a basket of foreign currencies. It reflects the strength of the dollar in the global market.
Oil demand refers to the total amount of crude oil that consumers and industries require over a specific period. It is influenced by economic activity and market conditions.
A futures contract is a legal agreement to buy or sell a specific commodity or asset at a predetermined price at a specified time in the future.
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