Oil prices extend rally amid prolonged US naval blockade of Iran

Global oil prices rose on April 29, extending a multi-day rally amid reports that the United States plans to prolong its blockade of Iran, heightening concerns over sustained supply disruptions in the Middle East, Reuters reports.

According to a report by The Wall Street Journal, Donald Trump has instructed aides to prepare for an extended blockade, citing U.S. officials. The move would continue efforts to pressure Iran’s economy and curb its oil exports by restricting shipping to and from its ports.

Brent crude futures for June delivery rose $1.11, or 1%, to $112.37 per barrel as of 0647 GMT, marking the eighth consecutive day of gains. The June contract is set to expire on April 30, while the more actively traded July contract rose 0.88% to $105.32.

U.S. West Texas Intermediate (WTI) crude futures for June delivery increased by 51 cents, or 0.51%, to $100.44 per barrel, following a 3.7% surge in the previous session. WTI has risen in seven of the past eight trading days.

"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.

Market participants are also evaluating the implications of the United Arab Emirates’ unexpected decision to exit OPEC, although analysts do not anticipate an immediate impact on supply.

“There must be a resolution in the Persian Gulf that allows for uninhibited energy flows through the Strait of Hormuz once again before UAE's output increase to realise,” analysts at ING Group said in a note on April 29.

They added that over the medium to long term, the UAE’s departure could lead to increased supply, suggesting that the Brent forward curve may shift into deeper backwardation.

Despite a ceasefire in the U.S.-Israeli conflict with Iran, tensions remain unresolved as both sides seek a formal end to hostilities. Iran has shut the Strait of Hormuz—a critical chokepoint for around 20% of global oil and liquefied natural gas supplies—while the United States has imposed a blockade on Iranian ports.

Washington continues to demand that Tehran halt what it describes as a nuclear weapons programme, while Iran is seeking reparations, sanctions relief, and a degree of control over the Strait of Hormuz.

The disruption has led to increased reliance on global inventories. Market sources said the American Petroleum Institute reported a second consecutive weekly decline in U.S. crude stocks.

Crude inventories fell by 1.79 million barrels in the week ending April 24, sources said. Gasoline stocks dropped by 8.47 million barrels, while distillate inventories declined by 2.60 million barrels.

By Sabina Mammadli