Brent Rises to $88.50 as U.S. Threatens Indefinite Iran Blockade

Crude oil prices rebounded on Friday as escalating tensions between the United States and Iran revived concerns about prolonged disruptions to Middle East energy supplies.

Brent crude oil, the international benchmark for Nigerian crude oil, advanced 1.64% to $88.50 per barrel, while U.S. West Texas Intermediate crude climbed 1.92% to $82.81 per barrel.

The gains put both benchmarks on course for a weekly increase after prices dropped more than 2% in the previous session.

The renewed buying followed Washington’s warning that its naval pressure on Iran could continue indefinitely, raising uncertainty over how quickly normal energy flows through the Strait of Hormuz could be restored.

The strategic waterway has remained at the centre of the conflict because of its importance to international crude and natural gas shipments.

Restricted traffic has forced refiners and traders to reassess supply routes while increasing the cost and complexity of moving barrels from the Middle East.

Shipping activity through Hormuz remained below recent levels. Commodity-vessel transits increased to nine on Thursday from five a day earlier but remained below August’s daily average of 12, according to shipping data reported by Reuters.

The latest escalation has shifted traders’ attention back toward supply security after Thursday’s market selloff was driven largely by concerns about weakening consumption and rising U.S. inventories.

U.S. commercial crude inventories increased by 17.4 million barrels in the latest reporting week, marking the largest weekly build since January 2023.

The unexpected increase intensified concerns that underlying demand may not be strong enough to absorb available supplies.

Major energy forecasters have also presented a weaker outlook for oil consumption, creating competing forces in the market.

On one side, elevated inventories and softer demand expectations are limiting the potential for sustained price increases.

On the other, continuing disruption around one of the world’s most important energy corridors is keeping a substantial supply-risk premium in crude prices.

The impact of the Middle East disruption is already changing global crude trade.

Asian refiners have increased purchases from suppliers outside the Gulf as they seek greater security of supply. U.S. crude has emerged as one of the alternatives with American shipments to Asia reaching a record 2.35 million barrels per day in July.

Some refiners have also turned toward barrels from other producing regions, potentially creating additional opportunities for exporters able to supply Asian buyers while Middle East shipping remains constrained.

For Nigeria, the renewed increase in Brent provides support for crude export earnings after Thursday’s decline. Higher international oil prices can strengthen foreign-exchange inflows and government petroleum revenue, although the benefit ultimately depends on Nigeria’s production and export volumes.

The immediate direction of crude prices is likely to remain closely tied to developments surrounding Iran and shipping through the Strait of Hormuz.

A prolonged blockade or further attacks on vessels could tighten physical supply and push prices higher, while progress toward reopening the waterway could quickly return market attention to rising inventories and the weaker global demand outlook.