Oil gains as US warns of more economic measures to isolate Iran

Oil rose after the US threatened to impose multiple economic measures against Iran in a bid to force its hand to reopen the Strait of Hormuz.

Brent approached $88 a barrel after dropping 2.2% in the previous session, while West Texas Intermediate traded near $82. Treasury Secretary Scott Bessent told Newsmax the US will apply economic pressure “like the world has never seen,” while continuing its naval blockade of Iran’s ports. He said more announcements will come next week.

Oil futures are on track for a weekly gain and are up more than 40% this year as the war that began in late February drags on. The International Energy Agency this week forecast a deeper supply shortfall this quarter, and sees the deficit in 2026 expanding to the widest in five years.

Iran has been in talks with Oman about reopening Hormuz, but they’ve yet to strike a deal despite optimism earlier this week that an agreement was within reach. Those efforts have likely been complicated by a hardening stance between Tehran and Washington, with President Donald Trump making sweeping new demands.

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US Energy Secretary Chris Wright told Fox News that the capacity of US forces to escort ships through the strait is increasing, allowing flows to rise. Tankers are often crossing with their transponders switched off in an effort to avoid targeted strikes, but transits remain risky.

Abu Dhabi National Oil Co., among the most successful operators in moving crude out of the Gulf, said two more of its ships were attacked late Thursday, state news agency WAM reported.

Until another major development emerges, oil prices will likely remain in an $80-to-$90 range, according to Saul Kavonic, senior energy analyst at MST Marquee. The outlook remains clouded by uncertainty over the conflict’s trajectory and the volume of oil leaving the region, he said.

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On the Red Sea coast, Iran-backed Houthi militants said they targeted Saudi Arabia’s Jazan refinery, following an earlier strike that delayed restart plans. Threats by the Yemen-based group have upended shipping there and opened up another front to the Middle East conflict.

A wave of Middle Eastern crude is set to make its way to the US this month, offering some respite as the nation’s commercial inventories hover near an eight-year low. Some of the oil exited the Persian Gulf after Washington and Tehran agreed to a now-collapsed ceasefire in June.

“Physical buyers and discretionary traders seem content to stay in wait-and-see mode,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “That’s leaving very little underlying support and giving macro and systematic flows more influence.”

Prices:

Brent for October settlement rose 1% to $87.95 a barrel as of 7:47 a.m. in London

Futures are up more than 5% this week

WTI for September delivery was up 1.1% at $82.13 a barrel

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