Investing.com -- Crude futures surged more than 2% amid intensifying global political discord, after Turkey downed a Russia fighter jet on the Syrian border on Tuesday morning.
On the New York Mercantile Exchange, WTI crude for January delivery traded in a broad range between $41.84 and $43.45 a barrel, before settling at $42.92, up 1.17 or 2.80% on the session. At one point on Tuesday, Texas Long Sweet futures reached their highest level in two weeks before paring some of the gains late in the session. After slipping below $39 a barrel last week, the front month contract for U.S. crude has jumped by more than 6% over the last two sessions.
On the Intercontinental Exchange (ICE), brent crude for January delivery wavered between $44.93 and $46.49 a barrel before settling at $46.16, up 1.33 or 3.00% on the day. With the considerable gains, North Sea brent futures moved above $46 a barrel for the first time in nine sessions. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.24, above Monday's level of $3.08 at the close of trading.
NATO called an emergency meeting on Tuesday afternoon after a Turkish F-16 jet plane shot down a Russian jet along the Turkish province of Hatay. Turkey claimed the jet violated its air space, adding that it issued 10 warnings to Russia in a span of five minutes before firing the shots, Pentagon officials told Fox News. Officials from the Russian Defense Ministry, meanwhile, claimed the jet remained within the borders of Syrian territory, citing "objective monitoring data." Russia president Vladimir Putin warned that the attacks could place a serious dent in Russian-Turkish relations, calling the actions "a shot in the back."
It came hours before France president Francois Hollande arrived in Washington for diplomatic talks with U.S. president Barack Obama on the collaborative efforts needed between Western powers in order to combat global terrorism. Hollande has scheduled a series of meetings with World leaders, including Putin in the wake of a terrorist attack in Paris earlier this month that claimed the lives of at least 120 civilians.
Leaders from the Islamic State have accepted responsibility for the attacks.
Speaking at a press conference at the White House, Obama said he expects to be in communication with Turkey president Recep Tayyip Erdogan in the coming days. "Turkey like every country has the right to defend its air space," Obama said. "I think its important right now that the Russian and Turks are talking to each other, find out exactly what happened and take measures to discourage any type of escalation."
In revised estimates last week, the U.S. Department of the Treasury released data, which showed that the Islamic State brings in approximately $500 million in oil revenues annually. Previously, the U.S. had underestimated ISIS' annual oil proceeds by approximately $400 million, according to Bloomberg.
"France and the United States stand together, it is about destroying them no matter where they are," Hollande said. "It is about taking out their financing, hunting down their leaders, dismantling their networks and taking back the land they currently control."
Crude prices are sensitive to any signs of increased geopolitical tension in the Middle East, home to five of the top 10 producers of crude oil in the world, according to global consulting firm Enerdata.
Energy traders, meanwhile, continued to digest bullish comments from Saudi Arabia, in light of the kingdom's pledge to consider slashing prices in order to help stabilize the global energy market. OPEC is expected to discuss its long-term production and price forecasts when it meets next week in Vienna.
Elsewhere, the American Petroleum Institute is scheduled to release its weekly crude stockpile report on Tuesday evening after the close of trading. Separately, Wednesday's government report could show that crude inventories increased by 1.1 million barrels for the week ending on Nov. 20.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.25% to an intraday low of 99.52. On Monday, the index moved above 100 for the first time since mid-March.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.