Oil prices on Friday jumped after the Iranian state media reported of two rocket strikes on one of the country's tankers that was travelling through the Red Sea off the coast of Saudi Arabia, 60 miles from Jeddah.
Shortly after this news, international oil benchmark, Brent crude futures, gained 2.07 percent at $60.33 a barrel.
The National Iranian Oil Company told NBC News that its tanker was hit by two explosions at 5 am and 5:20 am local time.
Iranian state television said the explosion has damaged two storerooms aboard the unnamed oil tanker, causing oil to leak into the Red Sea.
This incident comes existing tensions in the region. On 14 September, two of Saudi Arabia's largest oil production facilities were attacked, forcing the country to temporarily shut down roughly 50 percent of its output. While Yemen's Houthi rebels, who have an on-going war with the kingdom since 2015, claimed the attack, numerous officials and analysts pointed at Tehran.
Saudi Arabia managed to quickly recover its production easing the pressure on oil prices. As a result, petrol and diesel prices in India were also cut in the last few days including Friday.
The incident could also intensify tensions between Iran and the US that began over a year ago when President Donald Trump unilaterally withdrew his country from the nuclear deal and imposed sanctions on Iran, crushing its economy.
Oil prices could also come under further pressure on renewed hopes of reconciliation between the US and China over their trade disputes. The trade war, that started in 2018, dimmed the global economic outlook, pushing crude oil prices lower.