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US Oil Update: Crude Rallies on Hormuz Blockade, Israel Attack Threats

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Crude oil futures rallied in after-hours trading on Thursday as a double blockade of the Strait of Hormuz and the threat of Israeli strikes on Iran, fueled fears of a severe global supply crunch.

Front-month West Texas Intermediate crude futures climbed by 4.35% to $97.00 per barrel, while Brent futures jumped 4.45% to $106.68/bbl.

"Middle East crude loadings have ticked lower, with the US blockade curbing Iranian loading volumes and threatening further regional production curtailments," RBC Capital Markets strategists said in a note on Wednesday.

President Trump said in a social media post that a deal with Iran will only be made when it is "appropriate and good" for the US, following the indefinite extension of the ceasefire with Tehran agreed on April 7 earlier this week.

"For those people.......that think that I am 'anxious' to end the war with Iran, please be advised that I am possibly the least pressured person ever to be in this position," Trump said in a post on Truth Social.

Fueling bearish sentiment, Israel's Defense Minister, Israel Katz, reportedly said on Thursday that Tel Aviv was waiting for the approval from the US to resume the war against Iran and "complete the elimination of the Khamenei dynasty."

The US-Israeli alliance killed Iran's Supreme Leader Ayatollah Ali Khamenei at the start of the Middle East conflict.

Meanwhile, Trump ordered the US Navy to "shoot and kill" boats laying mines in the Hormuz on Thursday, while claiming that Washington now has "total control" over the passage and directed the military to act without hesitation against Iranian small boats.

US forces intercepted a sanctioned tanker in the Indian Ocean that was carrying oil from Iran ON Thursday. The interception comes a day after the US blocked the Iranian tankers M/V Hero II, M/V Hedy and M/V Dorena.

"We will continue global maritime enforcement to disrupt illicit networks and interdict vessels providing material support to Iran, wherever they operate," the US Department of War said in a social media post on X.

Iranian officials, on the other hand, have accused the US of breaching its commitments under a 10-point framework that Iran offered at the start of a fragile ceasefire, with parliament speaker Mohammad Baqer Ghalibaf saying a full ceasefire will only make sense if the US lifts its blockade.

The deputy speaker of Iran's parliament, Hamidreza Haji Babaei, said that the first tranche of tolls collected from ships passing the Hormuz has been deposited into the Iranian central bank's account, according to local media reports.

Tehran attacked three vessels in the Strait and diverted two to Iranian territorial waters on Wednesday, as flows via the strategic waterway have largely ground to a halt.

ING strategists said the reality of the supply disruption will set in as hopes fade, leaving further upside for prices.

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