Oil Rises as US Targets Iran's Economy

Oil capped a weekly gain as traders awaited details of a US campaign to isolate Iran's economy, with no apparent end in sight to a conflict that has slashed Middle East exports.

Treasury Secretary Scott Bessent said Thursday the administration would give details of the initiative next Monday after President Donald Trump described the push as an "economic D-day." The measures will target Tehran, and could also ensnare countries that deal with the Islamic Republic, possibly including China.

West Texas Intermediate settled just above $87 to notch a six-session run of gains. Global crude benchmark Brent closed higher as well, ending above $94 a barrel.

Asian buyers are picking up more US crude shipments, providing a key piece of demand support. Still, elevated oil prices are prompting China's refiners to keep crude purchases below the high levels seen before the Iran war, even as analysts and industry consultancies estimate imports are edging back toward 10 million barrels a day.

"Asia looks to be back in the buy mode for oil, re-stocking for seasonal needs in front of winter demand," said Dennis Kissler, head of energy trading at BOK Financial Securities Inc. "While not at the pace of past years it will be a price positive to crude in the near term."

Beijing - by far the largest importer of Iranian oil - said sanctions and pressure wouldn't work and called for a diplomatic resolution. In his remarks, Bessent noted that China got much of its energy from the region, while adding that "it would do them a big service to get with the program."

Oil has rallied more than 50% this year after the US-Iran war threw the Middle East into turmoil, with the two sides vying for control of the Strait of Hormuz. Bessent said Washington controlled the waterway and ships could exit via a southern lane, according to an interview on CNBC. Still, Tehran has repeatedly insisted it retains authority over the conduit, which saw more vessel attacks this week.

Trump's threat of increased economic pressure comes after months of military strikes and a full naval blockade of Iran's ports failed to force Tehran to capitulate. But the Islamic Republic has long faced sanctions, and it's not clear what further pain the US could inflict on its economy.

"The market narrative is: 'Iran has been under sanctions for 50 years and will not give in - this will just prolong the crisis further'," said Arne Lehman Rasmussen, chief analyst at AS Global Risk Management.

Oil Prices

• Brent for October settlement rose 0.7% to settle at $94.39 a barrel
• WTI for October delivery rose 0.3% to settle at $87.06 a barrel

Global fuel supplies are also being affected by Russia's war against Ukraine. Dozens of Ukrainian attacks on Russian refineries and ports have disrupted the country's energy industry, triggering shortages in some regions and prompting the government to ban exports of most types of road fuel.

That's contributed to tightness in the global diesel market, with price gains far outpacing the advances seen in crude oil.

In the US, average nationwide retail diesel prices surged above $5.55 a gallon this week, the highest since late May, according to figures from the American Automobile Association. Meanwhile, the margin for making diesel from crude oil in the country recently topped $100 a barrel to hit a record.

Commodities priced in the US dollar including crude have also been supported this week by a further decline in the currency. On Friday, a gauge of the greenback headed for the lowest close since May.