Oil markets extended a multi-day rally on Wednesday after reports that the United States will prepare to prolong a blockade of Iranian ports, a development that market participants said would likely deepen supply interruptions from the Middle East.
The Wall Street Journal reported late on Tuesday, citing U.S. officials, that U.S. President Donald Trump has instructed aides to ready plans for an extended blockade of Iran. The report said the president will continue steps to tighten pressure on Iran's economy and its oil exports by preventing shipping to and from its ports.
Brent crude futures for June increased by 52 cents, or 0.47%, to $111.78 a barrel at 0154 GMT, marking an eighth consecutive day of gains for that contract. The June Brent contract is due to expire on Thursday; the more actively traded July contract was trading at $104.84, up 0.4%.
U.S. West Texas Intermediate (WTI) futures for June rose by 57 cents, or 0.57%, to $100.50 a barrel. WTI had added 3.7% in the previous session and has advanced in seven of the last eight trading days.
Analysts linked the recent price advance directly to disruptions in shipping. "The recent rise in oil prices has been driven by the Strait blockade. If Trump is prepared to extend the blockade, supply disruptions would worsen further and continue to push oil prices higher," said Yang An, an analyst at Haitong Futures.
The geopolitical dynamics cited in the reports remain complex. Though there is a ceasefire in the U.S.-Israeli war with Iran, the conflict was described as deadlocked while the parties seek a formal resolution. Iran has shut shipping flows through the Strait of Hormuz - a key maritime corridor that carries about 20% of global oil and liquefied natural gas supplies - while the U.S. has blockaded Iranian ports.
The effect of those disruptions is visible in stocks held in inventories. Market sources said late on Tuesday that the American Petroleum Institute reported U.S. crude oil inventories fell for a second consecutive week. Crude stocks decreased by 1.79 million barrels in the week ended April 24, sources said. At the same time, gasoline inventories declined by 8.47 million barrels and distillate inventories fell by 2.60 million barrels.
Taken together, the reported extension of U.S. measures against Iran and the continued closure of shipping flows through the Hormuz corridor are being watched by traders as drivers for tighter global supply conditions. That combination of policy actions and disrupted transit through a critical chokepoint has underpinned the recent climb in benchmark crude prices.
Market participants will be monitoring how long the blockade is extended, any shifts in shipping patterns, and subsequent inventory reports for further signs of tightening or relief in supply. For now, the consensus among traders and analysts cited in market reports is that the prospect of an extended blockade increases the likelihood of ongoing price pressure.
Contextual notes
- Reported U.S. administrative steps to prepare for a longer blockade of Iranian ports were cited by U.S. officials in the Wall Street Journal.
- Brent and WTI futures both advanced, with specific June contract moves and the July Brent price identified above.
- U.S. inventory draws were reported by market sources referencing the American Petroleum Institute data for the week ended April 24.