The United States threatened an indefinite naval blockade of Iran on Thursday, with Treasury Secretary Scott Bessent promising economic measures “like have never been seen in the history of economic isolation of a country.” The warning came as two vessels from the Abu Dhabi National Oil Company were attacked while transiting the Strait of Hormuz, an incident the UAE government condemned as an Iranian attack.
The developments sent crude oil prices stabilizing after a volatile session. Brent futures held at $87.08 a barrel while West Texas Intermediate crude traded at $81.31, with both benchmarks on track for weekly gains of about 4 percent. The attacks on ADNOC vessels marked a significant escalation, as they targeted the commercial shipping of a US-allied Gulf state rather than Iranian or Western assets.
The Strait of Hormuz, which carried roughly 20 percent of the world’s oil supply before the conflict began, remains heavily constrained. Iran’s newly appointed Basj paramilitary commander Hossein Taeb declared the strait is “under the management and control of the Islamic Republic,” according to the semi-official Fars news agency. Traffic through the waterway has remained far below normal levels for months.
The International Energy Agency warned this week that global oil stockpiles are rapidly dwindling as the world burns through reserves to compensate for lost Hormuz flows. The warning came alongside downward revisions to demand growth forecasts from both OPEC and the IEA, creating opposing pressures on prices. Rising US crude inventories, which posted their largest weekly gain in over three years, added further bearish signals.
Bessent’s comments on Newsmax suggested the US would escalate pressure on Tehran as ceasefire talks have stalled. The blockade threat represents the most aggressive US posture since the conflict began, raising the prospect of direct naval confrontation in waters that handle a fifth of global oil traffic.
The ADNOC attacks underscore the widening radius of the conflict’s impact on energy infrastructure. Saudi Arabia has already shuttered its 400,000-barrel-per-day Jazan refinery following repeated Houthi strikes, and the broader region faces compounding supply disruptions from the war. Analysts at Rystad Energy noted that the geopolitical backdrop is preventing sharper price declines despite weakening demand fundamentals.
The market remains caught between two forces: supply-side fears from the ongoing Hormuz disruption and conflict escalation, versus demand-side concerns from slowing global growth and rising inventories. The result, according to KCM chief market analyst Tim Waterer, is a market that “remains supported but struggles to break meaningfully higher while these opposing pressures remain in place.”
Sources: Yahoo Finance / Reuters, Dawn / Reuters, Reuters Energy
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