Oil prices climb on fears of prolonged Middle East supply disruptions

Global oil prices moved higher on Friday and remained on course for weekly gains as fresh threats from the United States to maintain an indefinite naval blockade of Iran

LONDON: Global oil prices moved higher on Friday and remained on course for weekly gains as fresh threats from the United States to maintain an indefinite naval blockade of Iran heightened concerns over the security of crude shipments from the Middle East.

Brent crude futures gained $1.43, or 1.64%, to reach $88.50 a barrel by 0810 GMT. US West Texas Intermediate (WTI) crude also advanced, rising $1.56, or 1.92%, to $82.81 a barrel.

The latest rally reflected growing market anxiety that the conflict in the region could persist for an extended period, potentially placing further pressure on one of the world’s most important oil supply routes.

Bjarne Schieldrop, chief analyst at SEB Research, said the prospect of prolonged US pressure on Iran had increased uncertainty in the oil market. He noted that the latest developments offered little indication of a quick return to normal conditions in the region.

US pressure raises supply concerns

Oil markets reacted strongly after the United States warned on Thursday that its naval blockade of Iran could continue indefinitely while Washington considers additional economic measures against Tehran.

US Treasury Secretary Scott Bessent said the administration was preparing further measures aimed at increasing economic pressure on Iran, signalling that Washington could take steps beyond those already announced.

The comments added to concerns that tensions between the United States and Iran could remain elevated, making it more difficult for shipping and energy companies to operate normally in the region.

Schieldrop said expectations for a rapid restoration of regular shipping through the Strait of Hormuz had weakened significantly as a result of the latest developments.

The waterway is particularly important to global energy markets. Before the current conflict began in late February, roughly one-fifth of the world’s daily oil and liquefied natural gas supplies passed through the Strait of Hormuz.

Any prolonged disruption could therefore have consequences far beyond the Middle East, potentially affecting crude availability, transportation costs and fuel prices in major consuming markets.

Strait of Hormuz traffic under pressure

Shipping activity through the strategic waterway declined below the monthly average toward the end of the week as tensions increased and both sides issued competing claims regarding control of the passage.

The situation escalated further on Thursday when two vessels belonging to Abu Dhabi National Oil Company were attacked while travelling through the strait, according to the UAE’s state news agency WAM.

The UAE government condemned the incident and attributed the attack to Iran, adding another layer of uncertainty for commercial shipping operators using the vital route.

Market participants are closely monitoring developments in the strait because even a partial disruption could force vessels to take longer and more expensive alternative routes.

Demand outlook limits oil gains

Despite the immediate supply concerns, expectations of weaker global oil demand growth are acting as a counterweight to the price rally.

Recent forecasts from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have pointed towards slower growth in oil consumption, suggesting that demand may not be strong enough to absorb a prolonged increase in prices without affecting economic activity.

US inventory data also provided a bearish signal. American crude stockpiles recorded their biggest weekly increase in more than three and a half years, indicating that supplies in the world’s largest oil-consuming economy remain relatively comfortable.

Norbert Rucker, head of economics and next-generation research at Julius Baer, said recent reports from the IEA and US Energy Information Administration showed that oil storage levels were holding up better than markets had initially feared.

According to Rucker, stronger-than-expected inventories could eventually put downward pressure on crude prices if geopolitical risks ease.

For now, however, the possibility of further escalation between Washington and Tehran is keeping traders focused on supply risks. The market is expected to remain highly sensitive to developments surrounding the Strait of Hormuz, particularly any signs of prolonged restrictions on tanker movements.

Analysts said the direction of oil prices in the coming sessions would depend on whether geopolitical tensions intensify further or whether diplomatic efforts succeed in restoring more predictable shipping and energy flows from the region.