Oil Prices Rise Amid US Threats to Blockade Iran Indefinitely
Oil prices inched higher on Friday after the US threatened to maintain a naval blockade of Iran indefinitely, reviving crude supply concerns. The move comes as tensions between the two countries escalate, with the US stating it could ramp up economic pressure on Tehran.
The US Treasury Secretary Scott Bessent said the US would apply measures 'like have never been seen in the history of economic isolation on a country', sparking fears of a longer war that could constrain global oil supply. Iran continues to limit traffic through the Strait of Hormuz, which carried 20% of the world's oil before the conflict.
Despite the threat, Brent futures rose 9 cents to $87.16 a barrel, while US West Texas Intermediate crude futures rose 4 cents to $81.29 a barrel. The prices had fallen over 2% in the previous session but remain supported, with both benchmarks on track for weekly gains near 4%.
KCM chief market analyst Tim Waterer noted that heightened geopolitical risk from the blockade is being counterbalanced by lower demand forecasts and a sharp US crude inventory build. Two vessels belonging to Abu Dhabi National Oil Company were attacked while transiting the Strait, with the UAE accusing Iran of the attack.