US Threatens Indefinite Naval Blockade of Iran, Oil Prices Soar

Oil prices surged on Friday and were poised for weekly gains after the US threatened an indefinite naval blockade of Iran, sparking concerns about disruptions to crude supplies from the Middle East. Brent futures rose $1.43 or 1.64% to $88.50 a barrel at 0810 GMT, while U.S. West Texas Intermediate crude futures climbed $1.56 or 1.92% to $82.81 a barrel.

Bjarne Schieldrop of SEB Research attributed the higher oil prices to the US's latest approach, which implies a substantial extension of the troubles in the Middle East with little hope for a near-term resolution. He warned that 'a return to normal flows out of the Strait of Hormuz is now suddenly without any near-term hopes.'

The US threats come as Iran curbs flows through the Strait of Hormuz, which handles about one-fifth of global daily oil and liquefied natural gas supplies. Shipping traffic in the strait fell below its monthly average towards the end of the week, with both countries making competing claims over control of the waterway.

Meanwhile, forecasts from OPEC and the International Energy Agency pointed to weaker demand growth, while US crude inventories posted their largest weekly increase in more than 3.5 years.