Oil steadies as US threatens indefinite Iran blockade
Global crude benchmarks held near multi-session highs on Friday as Washington signaled an indefinite naval blockade of Tehran, offsetting weak demand forecasts and keeping energy markets tightly constrained by Middle East supply risks.
Brent crude futures edged up 9 cents to $87.16 a barrel by early Friday trading, while US West Texas Intermediate gained 4 cents to $81.29. The modest gains follow a sharp pullback in the previous session that snapped a six-day winning streak for Brent and a five-day rally for WTI.
Market support stems from escalating rhetoric out of Washington regarding the conflict with Tehran. The US government stated it could sustain a naval blockade of Iran indefinitely and intends to intensify economic pressure while ceasefire negotiations remain stalled.
"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 on a country," Treasury Secretary Scott Bessent said during a Newsmax interview. He indicated the administration intends to severely restrict Iranian revenues through unprecedented sanctions.
These threats arrive as Iran restricts maritime traffic through the Strait of Hormuz, a vital chokepoint that previously handled 20 per cent of global oil flows. Hossein Taeb, the newly appointed head of the Basj paramilitary unit, asserted that the waterway remains firmly under the management and control of the Islamic Republic.
Regional tensions flared again on Thursday evening when two vessels belonging to the Abu Dhabi National Oil Company were attacked while transiting the strait. The UAE government condemned the incident as an Iranian strike, adding physical risk premiums to a market already pressuring US President Donald Trump to resolve an unpopular domestic war.
Despite the supply constraints, upward price momentum has been capped by deteriorating consumption forecasts. Both OPEC and the International Energy Agency revised down their global demand growth projections this week, while domestic data revealed the largest weekly build in US crude inventories in more than three and a half years.
These competing fundamentals have left energy traders trapped in a narrow trading band. Tim Waterer, chief market analyst at KCM, noted that "the result is a market that remains supported but struggles to break meaningfully higher while these opposing pressures remain in place."
Despite the daily volatility, the underlying trend for the week remains positive for energy producers and investors. Both global benchmarks are currently tracking weekly advances of approximately 4 per cent as physical disruptions continue to underpin forward curves.
