US Threatens Indefinite Iran Blockade, Oil Prices Soar
Oil prices rose on Friday in response to the US threatening an indefinite naval blockade of Iran, which has sparked concerns over disruptions to Middle East crude supplies. Brent futures climbed $1.43, or 1.64%, to $88.50 a barrel, while US West Texas Intermediate (WTI) crude rose $1.56, or 1.92%, to $82.81 a barrel.
Bjarne Schieldrop of SEB Research said the higher oil prices are a natural consequence of Washington's latest approach, which points to an extended period of Middle East instability with little near-term hope of resolution.
The US warning comes as Iran restricts flows through the Strait of Hormuz, which handled about a fifth of global daily oil and liquefied natural gas supplies before the conflict began in late February. Two vessels belonging to the state-owned Abu Dhabi National Oil Company (ADNOC) were attacked while transiting the strait on Thursday.
Shipping traffic through the strait fell below the month's average toward the end of the week, with both the US and Iran making competing claims over control of the waterway. This development has led to concerns that a return to normal flows out of the Strait of Hormuz is unlikely in the near term.