US Threatens Indefinite Naval Blockade of Iran, Sending Oil Prices Soaring

Oil prices surged on Friday as the United States 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 gained $1.56, or 1.92%, to $82.81 a barrel.

Bjarne Schieldrop of SEB Research noted that higher oil prices are a natural result of the latest approach by the U.S., implying a substantial extension of trouble in the Middle East with little hope of a near-term resolution.

The U.S. warned on Thursday that it could maintain a naval blockade of Iran indefinitely and ramp up economic pressure on Tehran as ceasefire talks have stalled. Treasury Secretary Scott Bessent stated, 'Watch this space for more announcements coming next week because we are going to apply measures like have never been seen in the history of economic isolation of a country.'

A return to normal flows out of the Strait of Hormuz is now without any near-term hopes, according to Schieldrop.