US Tightens Pressure on Iran; Oil Set for Second Weekly Gain

Oil prices edged lower in Friday's trading (Aug 21) after hitting a one-month high, yet remained on track for a second consecutive weekly gain driven by escalating tensions between the United States and Iran. Brent crude fell 0.2% to $93.57 per barrel, while WTI dipped 0.4% to $86.50 per barrel.

Despite the late-week pullback, Brent is still poised to record a gain of over 5% for the week. Market sentiment remains dominated by the US-Iran standoff over the Strait of Hormuz, which shows no signs of resolution, keeping the risk of global oil supply disruptions high.

Pressure on Iran has intensified following US President Donald Trump's threat to impose new economic sanctions—described as the strictest in history. US Treasury Secretary Scott Bessent also emphasized that Tehran would face the "toughest sanctions" as part of Washington's push for a peace agreement.

However, Iran has rejected this pressure, while China—a major buyer of Iranian oil—has shown no indication of following the US lead. Precise details regarding the new sanctions remain unclear, given that Washington had previously restricted Iranian oil exports and imposed a naval blockade on the country.

The situation in the Strait of Hormuz remains a primary concern for the energy market. Shipping data indicates that commercial vessel activity in this strategic waterway remains well below pre-conflict levels, even though the US maintains that the route remains open. Iran has stated it will maintain restrictions until the United States fulfills the terms of an expired interim agreement.

Newsmaker Analysis: Oil fundamentals remain bullish, as Middle East supply risks continue to serve as the primary catalyst. Brent holding above $93 per barrel suggests the market is still pricing in a geopolitical risk premium. However, investors must closely monitor developments regarding US sanctions on Iran and potential responses from nations such as China. If disruptions in the Strait of Hormuz persist, the likelihood of oil prices testing the US$95-per-barrel level increases. (arl)

Source: Newsmaker.id