Oil rises after US threatens indefinite blockade of Iran; set for weekly gains
XLE•Oil rises on Middle East supply concerns
Oil prices rose on Friday and were on track for weekly gains after the United States threatened an indefinite naval blockade of Iran, raising concerns about disruptions to crude supplies from the Middle East.
Brent futures LCOc1 were up $1.43, or 1.64%, to $88.50 a barrel at 0810 GMT, while U.S. West Texas Intermediate crude futures CLc1 were up $1.56, or 1.92%, to $82.81 a barrel.
Higher oil prices are a natural result of the latest approach by the U.S., which implies a substantial extension of the trouble in the Middle East with little hope of a near-term resolution, said Bjarne Schieldrop at SEB Research.
On Thursday, the U.S. warned it could maintain a naval blockade of Iran indefinitely and ramp up economic pressure on Tehran as ceasefire talks have 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 of a country," Treasury Secretary Scott Bessent told Newsmax's "Rob Schmitt Tonight" programme in an interview.
"A return to normal flows out of the Strait of Hormuz is now suddenly without any near-term hopes," Schieldrop said.
Demand and inventory data temper the rally
Meanwhile, forecasts from OPEC and the International Energy Agency pointed to weaker demand growth, while U.S. crude inventories posted their largest weekly increase in more than 3-1/2 years.
"This week’s reports by the IEA and EIA were quite revealing. Storage is holding up much better than feared, which should pull oil prices lower," said Norbert Rucker, head of economics and next generation research at Julius Baer.
