Oil climbs 1.6% as Trump's Iran economic warfare threat tightens supply

Trump's "most crushing economic operation" pledge adds a secondary sanctions layer to an oil market pricing in Hormuz disruption.

Brent crude climbed 1.59 percent to $93.08 a barrel Thursday as Trump's "most crushing economic operation" pledge against Iran layered secondary sanctions risk on an oil market already disrupted by Hormuz blockades.

"This strait will be opened and closed only under Iran's command, and so long as you do not accept the reality of defeat and stop indulging in fantasies, Iran will continue to enforce the blockade," Kazem Gharibabadi, Iran's deputy foreign minister, said on X.

West Texas Intermediate futures for September delivery rose 1.63 percent to $87.23 in morning trade. The United Arab Emirates said Wednesday it was halting all trade and financial transactions with Iran after two ballistic missiles were launched toward its territory, a claim Tehran denied. Only two vessels transited the Strait of Hormuz on Friday with no crude oil shipments visible, according to ship-tracking firm Kpler, compared with more than 130 ships daily before the war. U.S. gasoline prices averaged $4.08 a gallon, up 29 percent from a year earlier, according to the American Automobile Association.

Trump's announcement targets intermediaries facilitating Iranian oil exports and financial transactions, adding an enforcement dimension to the pressure already shaping the market. If the measures hit channels used by China, Russia, or Gulf states to move Iranian crude, effective supply tightens further regardless of formal Hormuz transit volumes. The war, launched February 28, has left a tentative June ceasefire deal in tatters, with Iran's Foreign Minister Abbas Araqchi saying Tehran has not decided to resume talks.

Trump's Truth Social post listed specific mechanisms he wants shut down immediately: oil smuggling, currency swap lines, cash transfers, exchange houses, ship registries, and front companies. He framed the initiative as an "economic D-Day" and called on U.S. allies to join Washington in isolating Tehran. The president reiterated that Iran will never be permitted to obtain a nuclear weapon.

The UAE, one of Iran's key commercial partners, said two ballistic missiles had been launched toward its territory from Iran on Tuesday. Iran's foreign ministry spokesperson Esmail Baghaei denied the strikes. The move heaps further pressure on Iran, which is already facing economic sanctions from the U.S., and pushes the prospect of any renewed ceasefire agreement further from view.

Hormuz transit collapses to two vessels

The Strait of Hormuz, which handled one-fifth of the world's oil before the war, has seen traffic collapse. Kpler data shows only two vessels passed through on Friday with no crude oil shipments visible, though some ships may cross with transponders off. Vessels that dare navigate without Iranian permission risk missile or drone strikes. Axios reported a covert U.S.-run Hormuz oil corridor moving 10 million barrels a day through informal channels.

What happens next

Treasury Secretary Scott Bessent pledged to inflict more financial damage on Iran, telling Newsmax that announcements of more measures were coming next week. Iran's foreign minister said Washington must meet conditions on the strait for shipping to resume. The tentative June deal that briefly ended the war is now in tatters, and Iran's deputy foreign minister has said the strait will open and close only under Tehran's command. With only two vessels transiting the strait on Friday versus more than 130 before the war, the market's risk premium is unlikely to fade until either side returns to negotiations.

This article is for informational purposes only and does not constitute investment advice.