Oil prices notch weekly gains of more than 5% on impasse over Hormuz control

Oil prices surged over 5% on Friday, reversing a two-week decline, as a diplomatic standoff between the U.S. and Iran threatens to disrupt vital shipping routes through the Strait of Hormuz. The two nations are deadlocked over the waterway's status, with the U.S. asserting its open for commercial traffic and Iran refusing, insisting it would reopen only if the U.S. meets its demands, including pausing hostilities and unfreezing Iranian assets.

Brent crude futures for October settled up 1.8% to $88.60 a barrel, while U.S. West Texas Intermediate crude for September rose 1.4% to $82.42 a barrel. The week saw a 6% and 5.4% jump, respectively. President Trump declared Iran was being "very badly defeated," vowing to declare the Hormuz strait a U.S. territory and urging Americans to accept higher gasoline prices to prevent Iran from obtaining nuclear weapons.

Defense Secretary Pete Hegseth stated the U.S. could sustain its naval blockade indefinitely, causing significant economic harm to Iran. Treasury Secretary Scott Bessent warned of unprecedented economic isolation measures against Iran. Tanker traffic through the strait has plummeted to its lowest since mid-May, with one vessel recently hit by an unmanned aerial vehicle, sustaining minor damage.

Iran has drafted a strategic plan to manage the chokepoint, including a ban on U.S., Israeli, and other hostile vessels and equipment. However, demand forecasts from the Organization of the Petroleum Exporting Countries and the International Energy Agency remain pessimistic, citing economic slowdown, high prices, and limited supplies.