Brent futures settled above $88 a barrel, notching a roughly 6% gain for the week, according to Bloomberg. The benchmarks were on track for weekly rises of about 4% after the prior session's fall of more than 2%, paring gains following Brent's six-session rally and a five-session rise for WTI. Despite the bearish crude stock data, the broader geopolitical backdrop is preventing a sharper price decline, said Susan Bell, senior vice president for oil commodity markets at Rystad Energy. The latest price movement comes as oil prices edged higher as traders weighed a US threat to impose unprecedented economic measures on Iran, with the war that snarled the Strait of Hormuz in its sixth month. Oil futures have surged more than 40% this year as the war disrupted output and exports from top OPEC producers in the Persian Gulf, even as they've found ways to ship their crude out to global markets.
The United States has definitively extended its naval blockade of Iran indefinitely, with Defence Secretary Pete Hegseth telling reporters that the US military has the capability to maintain a naval presence in the region to enforce its blockade of Iran. As per The Hindu BusinessLine, Hegseth stated: "Indefinitely the US Navy can maintain a blockade like that because we'll rotate ships in and out, as we have, and we'll continue to." This development comes as Treasury Secretary Scott Bessent told Newsmax that the US will apply economic pressure on Iran "like the world has never seen," with more to be announced next week. The escalation comes as ceasefire talks have floundered and global oil supply is dropping, with the US maintaining its position that Trump has "total control" over the strait while Iranian denials persist. The strait is "under the management and control of the Islamic Republic," however, the recently appointed head of Iran's Basj paramilitary unit, Hossein Taeb, has said, according to the semi-official Fars news.
Treasury Secretary Scott Bessent has outlined a comprehensive blueprint for unprecedented economic pressure on Iran, targeting multiple vulnerabilities beyond existing naval blockades and sanctions. China currently purchases more than 80% of Iran's oil exports, creating a significant pressure point that Washington has already begun targeting with sanctions on Chinese teapot refineries and firms. However, hitting major Chinese banks that finance Iranian oil trade risks worsening tensions with Beijing ahead of a planned meeting between President Trump and Chinese leader Xi Jinping, as noted by Bloomberg Economics analyst Chris Kennedy. The US could also target Iranian exchange houses in countries like the UAE that help Iran repatriate funds, building on Treasury's existing sanctions campaign against alleged money laundering operations. Additional measures include threatening secondary sanctions on entities conducting business with Iran, similar to Trump's approach toward North Korea in 2017, which could force foreign companies to choose between Iranian business and US financial access. Recent measures have targeted Iran's shadow oil fleet; shipping insurers; entities and people enabling Iran's acquisition of weapons; and digital exchanges, freezing an estimated $500 billion in Iran-linked cryptocurrency, according to Business Standard.
Iran and Oman are yet to reach an accord to reopen the crucial waterway, after optimism earlier in the week that an agreement was within reach, according to Bloomberg. The latest developments come as reports of strikes on the vessels passing through the Strait continued, with Abu Dhabi National Oil Co. saying two more of its ships were attacked late Thursday, following earlier reports where vessels transiting the Strait of Hormuz fell to a one-week low of eight on Tuesday, compared to before the war when 125 to 140 vessels passed through the crucial waterway each day. The UAE's ADNOC said on Friday that 15 of its vessels had been attacked while passing through the Strait of Hormuz since the conflict began, underscoring the ongoing risks to regional crude supplies. The UK Maritime Trade Operations on Saturday said it had been notified of a projectile striking the hull of a bulk carrier, with two Abu Dhabi National Oil Co. vessels struck while transiting Hormuz on Thursday and another hit on Friday evening, according to UAE state news agency WAM. There were no reports of injuries in the latest incidents.
The latest US threats come as Iran continues to limit traffic through the Strait of Hormuz, which carried 20% of the world's oil before the conflict, driving up fuel prices and putting pressure on US President Donald Trump to end a war that is unpopular at home. US President Donald Trump is under pressure at home to end a war that is deeply unpopular, with high fuel prices dragging down his approval ratings and potentially eroding his party's control of Congress in midterm elections in November. Trump has repeatedly asserted that the US has "total control" over the strait, prompting Iranian denials, while negotiations between Washington and Tehran appeared deadlocked as both sides hardened their positions. Trump has also repeatedly threatened to escalate military strikes and "hit Iran hard," although he has thus far resisted deploying ground troops or seizing strategic islands and bombing desalination plants, according to Business Standard. In a speech on Long Island Friday, Trump said a US blockade of Iranian ports was a "wall of steel" that enabled Washington to effectively govern Hormuz. "Pretty soon I'll be declaring the Hormuz strait a territory of the United States," he said with a chuckle, as reported by NDTV.
The International Energy Agency this week forecast a deeper supply shortfall this quarter, and sees the deficit in 2026 expanding to the widest in five years, according to Bloomberg. The International Energy Agency on Wednesday forecast that global oil supply would fall by 4.3 million barrels per day, or around 4 per cent, this year, representing a significant increase from its previous forecast of a 3.7 million barrels per day drop just a month ago. As per Business Standard, oil prices settled down more than 2 per cent on Thursday after a week of gain, as investors focused on signs of weaker global demand and a sharp increase in US crude inventories. Oil prices extended their decline on Friday as Brent crude futures fell 30 cents or 0.34% to $86.77 a barrel, while US West Texas Intermediate (WTI) crude futures gained 34 cents or 0.42% to $80.92 a barrel, according to The Economic Times. There had been some 65 confirmed incidents involving vessels in Hormuz and the broader Middle East during the conflict and 17 seafarers had died as of Aug. 11, according to the International Maritime Organization, according to NDTV. Global economists have forecast a sharp drop in global growth as a result of the war, and potentially a swing into recession in some areas, warning that the impact will grow if the war is not ended soon.
