Iran Blockade Threatens Oil Prices, But $88 Mark Holds

The US has threatened to maintain its naval blockade of Iran indefinitely, but oil prices remain steady below $88 per barrel. Despite this escalation, Brent crude stood near $87.08 on Friday after snapping a six-session winning streak. The benchmark had briefly touched $90 earlier in the week as hopes for a quick resolution to the Strait of Hormuz standoff faded.

Weaker demand forecasts and a US inventory build are giving traders reasons to resist chasing crude higher without another physical disruption. According to the Energy Information Administration, US commercial crude inventories jumped 17.4 million barrels to 424.4 million in the week ended August 7.

Samer Hasn, senior market analyst at XS.com, described the backdrop as a state of 'no peace and no war' in comments reported by The Wall Street Journal. He said escalation risk should keep a geopolitical premium embedded in crude, even as weaker demand forecasts and rising US inventories limit gains.

David Morrison, senior market analyst at Trade Nation, noted that the latest inventory data showed a significant jump in crude inventories, with exports slumping. The International Energy Agency expects global oil demand to fall by 1.6 million barrels a day in 2026 after cutting its second-half estimate by around 550,000 barrels a day from July.