Oil Price Today (August 14): Crude oil dips below $88 despite Trump’s threat to blockade Iran indefinitely. What are experts saying?

Oil prices edged lower for a second session on Friday even as the United States threatened to keep a naval blockade of Iran in place indefinitely, renewing concerns over crude supplies. The move came a day after oil prices fell on a weaker outlook for global demand.

Brent crude futures were down 30 cents, or 0.34%, at $86.77 a barrel, while US West Texas Intermediate (WTI) crude futures gained 34 cents or 0.42% to $80.92 a barrel. Both benchmarks had dropped more than 2% in the previous session, ending a six-session winning streak for Brent and a five-session run of gains for WTI. Despite the decline, both were headed for weekly gains of around 4%.

The United States said on Thursday that it could keep its naval blockade of Iran in place indefinitely and would step up economic pressure on Tehran as ceasefire negotiations remained stalled.


Also read | US can keep naval blockade on Iranian ports "indefinitely," Pentagon chief says

"Watch this space for more announcements coming next week because we are going to apply measures like have never been seen in the history of economic isolation on a country," US Treasury Secretary Scott Bessent said in an interview on Newsmax's "Rob Schmitt Tonight" programme.

The latest threats from Washington came as Iran continued to restrict traffic through the Strait of Hormuz, a key oil transit route that carried 20% of the world's oil before the conflict. The disruption has pushed up fuel prices and increased pressure on US President Donald Trump to bring an end to a war that remains unpopular at home.

At the same time, expectations of prolonged supply disruption have been countered by weaker demand forecasts. OPEC and the International Energy Agency lowered their projections for global oil demand growth this week, while US data showed crude inventories posted their biggest weekly increase in more than three and a half years.

The risks to shipping and regional crude supplies also remained visible after two vessels owned by Abu Dhabi National Oil Company were attacked while transiting the Strait of Hormuz on Thursday evening, according to UAE state news agency WAM. The UAE government condemned the incident as an Iranian attack.

Also read | Dubai hotels see bookings rebound as tourists return after Iran war shock

Separately, ADNOC said on Friday that 15 of its vessels had been attacked while passing through the Strait of Hormuz since the conflict began.

Talks between Iran and the United States to end the war in the Gulf have remained stalled, keeping oil prices elevated. Trump said the US had "total control" of the strait, while negotiations between Washington and Tehran appeared deadlocked as both sides hardened their positions.

The US has continued its blockade of Iranian ports as part of a broader effort to increase economic pressure on Tehran.

What’s next?

The duration of the disruption will be crucial for the outlook for crude prices. JPMorgan estimates that every additional month of disruption could add around $7 to $8 a barrel to Brent prices. If the disruption continues for three months, the bank expects average monthly Brent prices to reach around $114 a barrel.

Goldman Sachs has also warned that Brent could climb to $120 a barrel if shipping disruptions through the Strait of Hormuz, the world's most important oil transit route, continue.

However, Goldman Sachs expects tensions in the Middle East to eventually ease under its base case. It forecasts Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. The bank also said risks remained tilted to the upside, as disruptions through the Strait of Hormuz and the Red Sea could persist for longer than expected.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)