US Threatens Indefinite Naval Blockade of Iran, Oil Prices Soar
The US has threatened to maintain an indefinite naval blockade of Iran, sparking concerns about disruptions to crude supplies from the Middle East and pushing oil prices higher. Brent futures rose by $0.25 or 0.29% to $87.32 a barrel at 1205 GMT while US West Texas Intermediate crude futures increased by $0.49 or 0.6% to $81.74 a barrel.
According to Bjarne Schieldrop at SEB Research, higher oil prices are a natural result of the latest approach by the US, implying little hope for a near-term resolution in the Middle East. The US has stated that it can maintain a naval blockade of Iran indefinitely and increase economic pressure on Tehran as ceasefire talks have stalled.
Iranian claims over control of the Strait of Hormuz led to a decline in shipping traffic through the channel, which handled about one-fifth of global daily oil and liquefied natural gas supplies before US-Israeli attacks on Iran began. Two vessels from Abu Dhabi National Oil Company were attacked while transiting the strait.
Despite constrained Middle Eastern supplies, forecasts from OPEC pointed to weaker demand growth and US crude inventories posted their largest weekly increase in over 3-1/2 years.