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Global airlines change flight paths as Iran downs U.S. drone

Written by Maritime First

…Oil rises towards $65 on fears of U.S. attack on Iran***

A host of major airlines said on Friday that their planes are no longer flying over the Strait of Hormuz, after Iranian forces shot down a U.S. drone in the area.

Lufthansa, Germany’s largest airline, said the re-routing began on Thursday with a decision to have the planes steer clear of the strait, located between Oman and Iran.

The restricted zone was expanded on Friday to parts of Iranian airspace.

Australian airline Qantas and Dutch airline KLM also adjusted their flight paths on Friday, saying that their carriers were avoiding the Strait of Hormuz and nearby Gulf of Oman.

British Airways said it was taking measures to avoid Iranian airspace.

U.S. carrier, United, said it suspended service between the New York City area and Mumbai, India out of precaution as the route passed over Iran, according to U.S. media.

The slew of announcements came after the U.S. Federal Aviation Administration banned flights for U.S.-registered aircraft over some Iranian-controlled airspace, citing heightened military activities and increased political tensions.

Meanwhile, hawkish rhetoric between Washington and Tehran continued to escalate over the downing of the unmanned U.S. reconnaissance drone, which Iran says entered its airspace.

The U.S. military says the drone was shot down in international waters while over the Strait of Hormuz, a strategically important waterway for global oil shipments.

“We hope that our enemies do not make such mistakes again,’’ said Iranian Foreign Ministry spokesman Abbas Mousavi in an interview with state broadcaster IRIB.

“We have informed the UN and lodged a protest against this clear and provocative violation of the United States.’’ he added

To back the government’s claim, Iran’s chief diplomat, Mohammad Javad Zarif tweeted what he said were the coordinates of the drone at the time it was targeted.

The Islamic Revolutionary Guard Corps held a news conference on Friday during which it displayed parts of the wreckage, which it says was recovered in Iranian waters.

According to the New York Times, U.S. President Donald Trump reportedly approved military strikes against Iran in retaliation for the downing of the drone, but pulled back from launching them late Thursday.

Officials said the president had initially approved attacks on a handful of Iranian targets, like radar and missile batteries.

The operation was under way in its early stages when it was called off, a senior administration official said. Planes were in the air and ships were in position, but no missiles had been fired when word came to stand down, according to the report.

Whether the president changed his mind on the strikes or the administration altered course because of logistics or strategy was not clear.

However, it was also unclear whether the strikes were to go ahead in the future.

Trump warned on Thursday that Tehran had made a “very big mistake’’ in downing a U.S. military spy drone, while saying he believed the shooting was unintentional.

“This country will not stand for it,’’ Trump said about the downing, even as he seemed open to downgrading the severity of the incident.

“I find it hard to believe it was intentional, it could have been someone who was loose and stupid.’’

When asked by reporters if Washington was gearing up for war with Iran, Trump said: “You will soon find out.’’

Washington has blamed Iran for recent attacks on oil tankers in the Gulf and sent more troops and military assets to the region, to back up its substantial forces already based in Arab Gulf monarchies. Iran denies involvement in the oil tanker attacks.

In the meantime,  oil prices rallied towards 65 dollars per barrel on fears of a U.S. military attack on Iran that would disrupt flows from the Middle East, which provides more than 20 per cent of the world’s oil output.

Brent crude was up 42 cents, or 0.66 per cent, at 64.87 dollars a barrel by 0850 GMT. The global benchmark jumped 4.3 per cent on Thursday and was up around five percent for the week, in its first weekly gain in five weeks.

U.S. West Texas Intermediate crude was up 21 cents, or 0.38 per cent, at 57.28 dollars a barrel. The U.S. benchmark surged 5.4 per cent on Thursday and was on track for a 9 per cent increase this week.

“Crude prices are spiking on increased Middle East tensions after Iran shot down a U.S. drone in what the U.S. claims is international airspace,” said Jason Gammel from Jefferies.

Iran said it had shot the drone over its territory.

Iranian officials told Reuters on Friday that Tehran had received a message from U.S. President Donald Trump through Oman overnight warning that a U.S. attack on Iran was imminent.

The officials said they had responded by saying that any attack would have regional and international consequences.

They also said Supreme Leader Ayatollah Ali Khamenei was against talks but said they would convey the U.S. message to him.

The New York Times reported on Friday, citing sources, that Trump had approved military strikes against Iran but pulled back from launching the attacks.

Tensions have been on the rise because U.S. sanctions on Iran have severely reduced oil exports from OPEC’s third largest producer and Washington has blamed Tehran, which denies any role, for a series of attacks on oil tankers in the Gulf.

“There is no doubt that a severe disruption to the transit of oil through this vulnerable route would be extremely serious,” said consultancy FGE Energy in a note.

The demand-side outlook has also improved, said Jefferies with appetite for risk assets rising after the European and the U.S. central banks signalled possible rate cuts this week.

A weaker greenback tends to support oil prices because crude is usually priced in dollars.

Another macroeconomic factor supporting prices is the plan by Beijing and Washington to resume talks to resolve a trade tariff war that has hit economic growth prospects.

“Trade anxiety has died down, pushing energy prices higher as global growth will not be pressured by a prolonged tariff war,” said Alfonso Esparza, senior market analyst at OANDA.

Concern about slowing economic growth and a U.S.-China trade dispute had pulled oil lower in recent weeks. That came after Brent reached a 2019-high above 75 dollars in April.





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Maritime First