Iran downs US drone as Hormuz tensions push oil above $92

Iran's downing of a US MQ-9 Reaper drone over Bushehr province marks the most direct military confrontation between the two nations since the war began in February.

Iran shot down a US MQ-9 Reaper drone over Bushehr province on Wednesday, the most direct US-Iran engagement since the war began, as Brent crude climbed above $92 a barrel on supply disruption fears.

"The United States decided to test our resolve, and the Iranian military will respond to every attack or threat," Foreign Minister Abbas Araghchi said, warning Washington to "depart our region if you wish to be secure."

The Islamic Revolutionary Guard Corps released footage of the shootdown over Jam city, claiming the drone was approaching from the northern Persian Gulf to intervene in combat. The incident followed the crash of a US Army Apache helicopter near the Strait of Hormuz — which President Trump said left both pilots safe, though Iran disputed that account — and US Central Command's confirmation of "self-defense strikes" against Iranian targets.

The Strait of Hormuz handles about 21 percent of global oil trade, and Iran has effectively restricted traffic since mid-April, charging vessels for passage and occasionally attacking those deemed allied with the US or Israel. Brent crude rose 83 cents to $92.29 a barrel, while West Texas Intermediate gained 68 cents to $88.97, as traders priced in a widening geopolitical risk premium.

Escalation in the Persian Gulf

The drone shootdown came on the 103rd day of a conflict that began Feb. 28 with joint US-Israeli strikes that killed former Iranian Supreme Leader Ayatollah Ali Khamenei. A fragile ceasefire between Washington and Tehran took effect April 8, but the truce has frayed repeatedly, most recently after Israel struck Beirut's southern suburbs on Sunday and Iran retaliated with missile barrages.

Iran's IRGC said it also targeted US bases across the region, claiming to have struck F-35 hangars at Jordan's Muwaffaq Salti Air Base, though Jordan said it intercepted five missiles without casualties. Kuwaiti air defense systems were activated to intercept "hostile aerial targets," and alarm sirens sounded across Bahrain as the IRGC claimed a drone attack on the US Fifth Fleet stationed there.

Oil Markets Reprice Risk

Brent crude's climb to $92.29 reflects a supply-risk premium not seen since the war's opening weeks, when prices briefly touched $100. The European Union announced it would impose new sanctions on Iran for restricting maritime traffic, the first time the bloc has applied freedom-of-navigation penalties against Tehran.

"The coming days will show that Israeli and American calculations are consistently wrong," a military source told Iran's semi-official Tasnim News Agency, signaling Tehran's readiness for a prolonged confrontation.

Diplomatic Window Narrows

President Trump said negotiators were in the "final throes" of talks for a peace deal and predicted the US would "declare total victory" within two weeks, claiming Iranian negotiators are "willing to give us everything." But Iran's president, Masoud Pezeshkian, struck a defiant tone, saying Tehran has "neither abandoned the field nor the negotiating table."

The last time US and Iranian forces engaged in direct fire was during the April 8 ceasefire breakdown, when oil prices surged 6 percent in a single session. With Iran now claiming the ability to strike US bases across the region and the Strait of Hormuz effectively contested, the risk premium in crude markets is likely to persist until a durable diplomatic resolution emerges.

This article is for informational purposes only and does not constitute investment advice.