Brent crude holds near $87 as US signals indefinite Iran blockade
Global benchmark crude prices are consolidating near multi-week highs as stalled ceasefire negotiations and threats of an indefinite US naval blockade keep the Strait of Hormuz severely disrupted.
Brent crude futures slipped 0.34 percent to $86.77 a barrel on Thursday, while US West Texas Intermediate gained 0.42 percent to $80.92. This slight divergence followed a pullback of more than 2 percent in the previous session that snapped winning streaks of six days for Brent and five days for WTI.
Despite the daily fluctuation, both contracts remain on track for weekly gains of approximately 4 percent. The market is currently digesting the economic fallout from the ongoing conflict in the Gulf, which has severely choked off one of the world's most critical energy transit routes.
Washington is signaling a prolonged economic and military squeeze on Tehran as diplomatic efforts remain deadlocked. The Pentagon indicated that the US naval blockade of Iranian ports could remain in place indefinitely to maintain pressure on the regime.
Treasury Secretary Scott Bessent reinforced this hardline stance during a television interview. He 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 on a country."
The physical risk to energy infrastructure remains acute in the Strait of Hormuz, which previously handled 20 percent of global oil flows. Abu Dhabi National Oil Company reported that 15 of its vessels have been attacked while transiting the waterway since the conflict erupted.
President Donald Trump has claimed the US maintains total control of the strategic chokepoint, even as the resulting spike in fuel prices generates domestic political friction. The war remains unpopular at home, increasing the urgency for a resolution that currently appears out of reach.
Investment banks are modeling severe upside risks if the maritime chokehold persists. JPMorgan estimates that every additional month of disruption will add $7 to $8 a barrel to Brent prices, potentially pushing the benchmark to an average of $114 if the standoff lasts three months.
Goldman Sachs issued a similarly stark warning, noting that Brent could surge to $120 a barrel if shipping lanes remain blocked. However, the bank's base case assumes Middle East tensions will eventually de-escalate, forecasting Brent to average $80 in the fourth quarter and $75 next year.
Even under that baseline scenario, Goldman cautioned that market risks remain heavily tilted to the upside. Prolonged supply chain fractures across both the Strait of Hormuz and the Red Sea threaten to keep global energy markets volatile for the foreseeable future.
