(Bloomberg) — Oil 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.
Brent settled above $88 a barrel, notching a roughly 6% gain for the week. Treasury Secretary Scott Bessent told Newsmax the US will apply economic pressure on Iran “like the world has never seen,” with more to be announced next week. He said the US will also maintain its naval blockade of Iranian ports as Washington pushes Tehran to reopen the key energy chokepoint.
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 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.
Iran has been in talks with Oman about reopening Hormuz, but they’ve yet to strike a deal despite optimism earlier this week that an agreement was within reach. Those efforts have been complicated by a hardening of positions in Tehran and Washington, with US President Donald Trump making sweeping new demands.
It’s unclear how effective US economic pressure to force Iran to capitulate will be. The Islamic Republic has in the past weathered several waves of sanctions and financial strain, without bending on its nuclear program or relinquishing its influence over the Strait of Hormuz.
Traders have returned to parsing through how much oil is crossing the waterway as progress has stalled over a deal. US Energy Secretary Chris Wright told Fox News that the capacity of US forces to escort ships through the strait is increasing, allowing flows to rise. Tankers are often crossing with their transponders switched off in an effort to avoid targeted strikes, but transits remain risky.
The prospect of higher flows through Hormuz than the market initially anticipated suggests that this week’s gain reflects a risk premium rather than tighter fundamentals, according to Scott Shelton, an energy specialist at TP ICAP Group Plc. “I would also assume fast money is is profit-taking ahead of another ‘deal’ on the table,” he added.
Abu Dhabi National Oil Co., among the most successful operators in moving crude out of the Gulf, said two more of its ships were attacked late Thursday, but the situation had been brought under control.
Until another major development emerges, oil prices will likely remain in an $80-to-$90 range, according to Saul Kavonic, senior energy analyst at MST Marquee. The outlook remains clouded by uncertainty over the conflict’s trajectory and the volume of oil leaving the region, he said.
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–With assistance from Kanoko Matsuyama and Paul Burkhardt.
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