Oil steadies after US threatens indefinite blockade of Iran

Oil prices hovered around steady levels on Friday after the United States declared an indefinite naval blockade of Iran, sparking renewed worries about crude supply disruptions following a weaker-than-expected demand outlook and a significant increase in U.S. crude stockpiles. Brent futures climbed by 1 cent, or 0.1%, to $87.08 a barrel by 0247 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed by 6 cents to $81.31 a barrel.

The benchmarks were on track for weekly gains of approximately 4% after the prior session's decline of over 2%, reducing earlier gains after Brent's six-day rally and a five-day rise for WTI. Despite a bearish outlook on crude inventories, the wider geopolitical context was preventing a more substantial price drop, according to Susan Bell, senior vice president for oil commodity markets at Rystad Energy.

The United States had previously warned it could maintain an indefinite naval blockade of Iran and escalate economic pressure on Tehran as ceasefire talks have stalled. Treasury Secretary Scott Bessent stated that the U.S. plans to implement unprecedented measures of economic isolation against the country. The threat of an extended conflict disrupting supply was tempered by forecasts from OPEC and the International Energy Agency lowering their demand growth projections, while data revealed the largest weekly increase in U.S. crude inventories in over 3-1/2 years.

Two vessels from Abu Dhabi National Oil Company were attacked while passing through the Strait of Hormuz on Thursday, a move the UAE government condemned as an Iranian attack.