Oil extends climb on fears of escalating Middle East tensions

Oil prices extended gains on Wednesday after the US shot down an Iranian drone and armed Iranian boats approached a US-flagged vessel in the Strait of Hormuz, rekindling fears of an escalation in tensions between Washington and Tehran. Brent crude futures were up 56 cents, or 0.8%, at $67.89 per barrel at 0400 GMT. US West Texas Intermediate crude was up 63 cents, or 1.0%, at $63.84 per barrel. Both benchmarks rose nearly 2% on Tuesday, as investors monitored developments between the US and Iran. “Uncertainty about how these talks will play out means the market will likely continue to price in some risk premium,” said ING commodity strategists on Wednesday.