Oil prices rise to highest level in nearly a month amid Hormuz impasse

Oil prices surged to their highest levels in nearly a month on Thursday following President Donald Trump's threat of new economic sanctions against Iran, amid ongoing deadlock over the Strait of Hormuz. Benchmark Brent oil futures surged 2.1% to $93.57 per barrel, while U.S. West Texas Intermediate crude futures increased 2.0% to $87.56 per barrel.

Prices hit their peak since July 24, following five consecutive days of gains. Market participants were preparing for a prolonged standoff in the Strait of Hormuz, after Trump announced a "MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY" via a social media post. Though specific details of the new sanctions remained undisclosed, Trump called for U.S. allies to join the effort, and warned entities engaging in trade with Iran would face economic penalties.

Tehran is already under U.S. sanctions on its oil exports and faces a naval blockade on Iranian ports. Iran responded by effectively blocking the Strait of Hormuz, disrupting approximately 20% of global oil and liquefied natural gas supplies. Recent shipping data indicated a significant reduction in commercial traffic through the Strait of Hormuz, despite U.S. claims that the waterway remains open to tanker traffic.

Trump reiterated on Wednesday that the U.S. controls the strait and suggested that negotiations with Iran could resume "at some point." Iran has denied ongoing dialogue with the U.S. and demanded that Washington fulfill the conditions of a June framework peace deal before progress can be made on unblocking the strait. The Memorandum of Understanding, as the interim agreement was known, expired earlier in the week, with few indications from either side that it would be renewed.