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US Oil Update: Oil Futures Climb on US-Iran Rhetoric Over Continued Blockade

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Crude prices gained on Friday as aggressive rhetoric from both Washington and Tehran shattered expectations of a diplomatic resolution to the ongoing crisis in the Middle East.

Front-month West Texas Intermediate crude futures jumped 2.6% to $103.81 per barrel, while Brent futures gained 2% to $107.88/bbl.

"Oil headed for a weekly gain... as the crucial Strait of Hormuz remains effectively closed with the US naval blockade of Iran's ports still in place," Saxo Bank analysts said.

Optimism faded completely following conflicting updates from world leaders speaking in Beijing.

US President Donald Trump reportedly warned that his patience with Iran was "running out." Trump added that Chinese President Xi Jinping had agreed during their high-stakes summit that Tehran must unconditionally reopen the chokepoint.

However, Iran quickly rejected the pressure. Speaking from the BRICS summit in New Delhi, Iranian Foreign Minister Abbas Araqchi declared that Tehran has "no trust" in Washington, Reuters reported.

He emphasized that Iran would only return to the negotiating table if the US proved it was serious about talks, leaving diplomatic efforts to end the maritime hostilities deadlocked, as per the report.

With Persian Gulf shipping paralyzed, energy markets are increasingly focused on rapidly dwindling global safety buffers.

"The longer the Strait of Hormuz remains blocked, the more attention is focused on inventory levels. If the US Department of Energy's weekly inventory report shows another significant drawdown in US oil stocks, this is likely to support oil prices," Commerzbank analysts said.

The US Energy Information Administration confirmed severe physical tightening in its weekly report on Wednesday noting crude inventories plummeted by 4.3 million barrels to 452.9 million barrels for the week ended May 8.

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