Oil Advances for Fifth Day as Trump Takes Aim at Iran’s Economy
(Bloomberg) -- Oil gained for a fifth day, as US President Donald Trump announced a package of measures intended to crush Iran’s economy.
Global benchmark Brent rose toward $92 a barrel, after adding more than 5% over the prior four sessions, while West Texas Intermediate for October was near $84. The moves “will be Economic Warfare and Isolation on an unprecedented scale,” Trump said in a social-media post. “This will be an ECONOMIC D-DAY, and we need all of our Allies to stand with the United States.”
Any country that allowed financial institutions, businesses, airports, or government entities to aid Iran would face tremendous economic consequences, he wrote, without giving details. Activities such as smuggling, cash transfers, exchange houses, and ship registries needed to be halted, he added.
Crude has rallied steeply this year following the outbreak of the conflict between Washington and Tehran, with the two sides locked in confrontation over the Strait of Hormuz. The US administration’s latest push to defeat Iran — which was trailed last week by Treasury Secretary Scott Bessent — risks inflaming tensions with takers of Iranian crude, including its main market, China.
Asia’s leading economy is the top importer of Iranian oil, although official customs data shows no inflows since 2022. The bulk of the barrels are taken by private refiners, known as teapots, which are attracted to the trade by the discounts typically on offer because of earlier rounds of US sanctions.
The Trump administration has in recent weeks shifted from military options against Iran to a strategy of greater economic pressure. The apparent goal is to drive Tehran into fresh talks meant to end the war for good, force an end the nation’s nuclear program and release its chokehold over Hormuz.
At present, US forces are sustaining a blockade of the Islamic Republic’s ports, with signs that some crude from other Gulf producers is being covertly ferried out through Hormuz despite threats to shipping. Earlier Wednesday, Trump said that there was “a lot of oil” passing through the waterway.
‘Barely Moved’
While prices rose Thursday, they remained below peaks seen earlier in the week. “The fact that oil barely moved may be the story,” said Haris Khurshid, chief investment officer for Karobaar Capital LP. “Six months into this, the market has learned not to reprice crude on every headline.”
He added: “Trump’s comments matter, but ultimately barrels moving through Hormuz matter more. Until physical flows start confirming the rhetoric I think the market discounts a lot of the noise.”
The announcement of the economic package came a day after the United Arab Emirates cut all economic ties with Tehran after accusing Iran of firing missiles at its territory. The UAE acts as a major financial and business hub for Iranians, and its move is set to increase the Islamic Republic’s isolation.
Brent’s prompt spread — the difference between its two nearest contracts — remains almost $2 a barrel in backwardation. That’s a bullish pattern marked by front-month futures trading at a premium to the next in sequence.
US data offered some support to prices midweek. Refinery runs climbed to the highest since 2019, and nationwide distillate inventories — a key area of concern given tightness in the diesel market — fell to the lowest level in more than a month, according to the Energy Information Administration. That helped to offset a 4.4 million-barrel increase in crude stockpiles last week.
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