Iran Blockade Puts Oil Prices Near $87 Amid Supply Concerns

Oil prices have stabilized near $87 per barrel after the US indicated it could maintain its naval blockade of Iran indefinitely, adding to supply concerns around the Strait of Hormuz. The International Energy Agency (IEA) expects global oil supply to fall by 4.3 million barrels per day in 2026, while it has cut its 2026 demand forecast to a 1.6 million-barrel-per-day contraction.

The US Defense Secretary Pete Hegseth said the Navy has enough assets to maintain the blockade of Iranian ports indefinitely by rotating ships into and out of the region. This comes as the Treasury Secretary Scott Bessent separately announced that the United States was preparing additional measures against Iran, describing them as an 'unprecedented economic-isolation campaign'.

The Strait of Hormuz remains a key supply-risk variable for oil markets, with current traffic significantly below normal levels. Only nine commodity vessels passed through the strait on Thursday, compared to a pre-conflict daily average of 130-140 vessels. The US Energy Information Administration estimates that 20.9 million barrels per day of oil moved through the waterway in the first half of 2025.

Despite these risks, Brent crude rose just 1 cent to $87.08 a barrel, while U.S. West Texas Intermediate gained 6 cents to $81.31 by 0247 GMT, indicating that markets are not pricing the US blockade announcement in isolation.