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US Oil Update: Crude Settles Higher as US Threatens Economic Isolation of Iran

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Crude futures settled higher in after-hours trading on Friday after the US said its naval blockade of Iranian ports could continue "indefinitely" and Adnoc vessels were attacked in the Strait of Hormuz, reigniting concerns over global supply disruption.

Front-month West Texas Intermediate crude futures rose by 1.4% to $82.40 per barrel, while Brent futures advanced 2% to $88.80/bbl.

Gelber & Associates strategists said that prices found support after the US threatened to maintain its naval blockade of Iran indefinitely, while tanker attacks and reduced traffic through the Hormuz kept immediate supply risks elevated.

Treasury Secretary Scott Bessent said on Friday that the US would announce additional measures next week, describing them as economic actions on a scale not previously seen, according to media reports.

Bessent said the US will continue its naval blockade of Iran's ports, part of Washington's pressure campaign to push Tehran to reopen the Hormuz.

Defense Secretary Pete Hegseth reportedly said on Thursday that the US military had the capacity to sustain its naval presence in the region indefinitely.

Saxo Bank strategists said the absence of fresh escalation around the still-closed Hormuz, combined with the previous week's very large US inventory build, has encouraged some profit-taking.

Fueling bullish sentiment, the UAE said late on Thursday that Iran attacked two vessels linked to state-owned energy giant Adnoc Group, which were transiting the Hormuz.

Iran's Islamic Revolutionary Guard Corps said on Friday that the Strait remains closed, dismissing US claims about the level of maritime and oil traffic through the strategic waterway.

Ali Ozamaei, the commander of the IRGC Navy, said the Strait of Hormuz is closed and that Iranian forces maintain firm control over activity in the waterway, according to Iranian state media.

Tensions around the Middle East energy chokepoints remain elevated on Aug. 1, though the number of confirmed crossings increased, with Hormuz recording 13 crossings, up 44% day on day, while Bab el-Mandeb traffic rose 4% to 29 crossings.

Meanwhile, two slicks have appeared in Iranian waters, as tit-for-tat attacks on oil tankers and other vessels by Iran and the US stoked concern about environmental damage to the Gulf, according to multiple media reports.

UK-based maritime risk and response firm Ambrey said it has been hired to salvage a grounded Russian shadow fleet tanker off Oman's coast and to stop an oil spill that threatens wildlife, according to multiple media reports.

While the threat to crude supplies has kept a floor under oil prices, concerns over global demand have capped the gains. US crude stocks rose by about 17.4 million barrels to 424.4 mmbbls in the week ended Aug. 7, according to the EIA, adding to bearish sentiment.

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