World oil prices rebounded strongly Thursday after Iran said it shot down a US spy drone near the Strait of Hormuz.
Oil also won solid support, in tandem with global stock markets, from the US Federal Reserve signaling it could soon cut interest rates, while the dollar and US Treasury yields fell.
London equities forged higher ahead of a Bank of England interest rate decision due at 1100 GMT. Borrowing costs are expected to remain at 0.75 percent despite persistent Brexit turmoil.
Iran's Revolutionary Guard said Thursday it had shot down a US "spy drone" which violated Iranian airspace near the Strait of Hormuz.
The US-manufactured Global Hawk surveillance drone was hit with a missile after "violating Iranian air space" over the waters of Hormozgan province, the Guard said.
But a US official said the drone was a US Navy MQ-4C Triton and that it had been shot down in international airspace over the Strait of Hormuz.
"Oil spiked higher on reports that a US drone was shot down by Iran," said analyst Neil Wilson at trading site Markets.com.
"This will only stoke tensions in the region and produce short-term support for oil prices."
In late morning deals, London's Brent North Sea crude oil for August delivery won $1.49, or 2.4 percent, to $63.31 per barrel.
New York's West Texas Intermediate for July also added $1.49, or 2.8 percent, to $55.25.
Crude had ended slightly down Wednesday despite official data showing a drop in US inventories -- indicating a pick-up in demand -- and news that OPEC and other producers led by Russia had agreed a date to discuss further caps.
"We know that geopolitical tensions in the region are worsening and raise supply-side concerns in terms of short-term outages," said analyst Wilson.
"But with OPEC already curbing output and US production at a record high, we still think the market is far less susceptible to a shock than in years gone by."
