Oil Prices Rise as Iran Blockade Sparks Supply Concerns
Oil prices strengthened again during Friday's trading (Aug 14) and are on track for a weekly gain after the United States threatened to maintain a naval blockade against Iran indefinitely. Brent crude edged up to around US$87.19 per barrel, while WTI rose to US$81.75.
On a weekly basis, Brent is poised for a gain of approximately 4.3%, while WTI is up about 4.6%. The market views Washington's latest stance as further diminishing the likelihood of a near-term resolution to the Middle East conflict.
The US government had previously stated its readiness to extend the blockade on Iran and ramp up economic pressure following a stalemate in ceasefire talks. US Treasury Secretary Scott Bessent also signaled that additional measures would be taken to increase Tehran's economic isolation.
This uncertainty has once again heightened risks surrounding the Strait of Hormuz. Shipping activity through this strategic waterway has fallen below average this month; prior to the conflict, roughly one-fifth of global oil and LNG supplies passed through Hormuz. Two vessels owned by the Abu Dhabi National Oil Company were also reportedly attacked while transiting the strait on Thursday.
While supply risks are supporting prices, oil's gains remain capped by a weaker demand outlook. OPEC previously lowered its global demand growth forecast, and US crude inventories recorded their largest weekly increase in over three years.
Newsmaker Analysis: The US blockade of Iran and attacks on vessels have caused a geopolitical risk premium to once again bolster oil prices. Barring tangible progress toward reopening Hormuz, Brent is likely to hold within the US$85–US$90 range. However, surging US stockpiles and a weakening demand outlook remain factors that could limit further rallies. (arl)
Source: Newsmaker.id
