Oil prices extended a recent rally on Thursday as traders reacted to continued disruption in the Strait of Hormuz and fresh reports that the United States is preparing for an extended naval blockade against Iran.
By 20:35 ET (00:35 GMT), Brent crude futures were up 1.5% at $119.75 a barrel, having earlier climbed to $120.34 a barrel - a level not seen since June 2022. West Texas Intermediate futures edged higher as well, rising 0.3% to $107.25 a barrel.
The renewed upside in oil follows media reports that U.S. President Donald Trump is weighing an extended blockade of Iranian waters. Those reports were reinforced by coverage that several senior American oil executives had met with the president at the White House to discuss measures to limit the conflict's economic impact on U.S. households.
Market concern centers on the prospect that an extended naval blockade would provoke retaliatory action from Iran, which could include keeping the Strait of Hormuz closed. That shipping channel has already been significantly slowed since Iran blocked passage in late-February, a disruption that the article cites as affecting roughly 20% of global oil flows.
At the same time, another report indicated that President Trump is seeking assistance from other countries to assemble a new international coalition aimed at reopening the strait. The president has repeatedly urged other nations to help reopen Hormuz, though the reporting notes that major U.S. allies have largely declined to participate. The coverage describes him as railing against NATO members for not supporting the U.S. and Israel militarily in the conflict.
Diplomatic channels appear strained. Talks between the U.S. and Iran largely fell through over disagreements related to Iran's nuclear activities, the reporting says. Although the president has indefinitely extended a ceasefire with Iran, both parties have reportedly been reluctant to engage in wider efforts to broker negotiations.
Oil's advance briefly cooled after the United Arab Emirates announced it will leave the Organization of Petroleum Exporting Countries this week. Nevertheless, the reporting suggests the UAE is unlikely to raise output in the near term because of production and shipping disruptions tied to the Iran war.
Summary: Brent and WTI rose on Thursday as ongoing Strait of Hormuz disruptions and reports of U.S. plans for an extended naval blockade of Iran heightened concerns about global oil supply, even as diplomatic initiatives to reopen the waterway show limited traction.
- Key points:
- Brent futures hit $120.34 a barrel intraday and were $119.75 a barrel by 20:35 ET, marking the highest prices since June 2022.
- West Texas Intermediate rose to $107.25 a barrel.
- Reports that President Trump is preparing for an extended naval blockade and seeking international support have amplified supply-risk concerns.
- Sectors impacted:
- Energy and oil producers - direct price exposure.
- Shipping and logistics - disruptions through the Strait of Hormuz.
- Refining and downstream industries - potential feedstock and cost pressure.
- Risks and uncertainties:
- Retaliatory closure of the Strait of Hormuz by Iran could sustain or increase global supply disruptions, affecting oil-dependent sectors.
- Limited participation from major U.S. allies in any coalition to reopen Hormuz may constrain the effectiveness of international efforts.
- Ongoing diplomatic deadlock between the U.S. and Iran, including stalled talks over nuclear activities, leaves prospects for a negotiated resolution uncertain.