US blockade diverts 65 ships as Hormuz risk lifts Brent 6%

The US maritime blockade against Iran has diverted 65 commercial ships as of Aug 19, deepening supply fears through the Strait of Hormuz and lifting Brent crude 6 percent for the week.

"US forces continue to enforce the maritime blockade against Iran," US Central Command said in a statement on Aug 19, adding that troops had disabled three vessels and boarded and inspected two others.

Brent crude settled at $88.52 a barrel on Friday, up 1.67 percent, while WTI crude closed at $82.40, up 1.42 percent. For the week, Brent gained about 6 percent and WTI 5.4 percent.

The strait carries roughly 20 million barrels of oil a day, about a fifth of global consumption, making any disruption a direct threat to energy prices, shipping insurance, and inflation expectations worldwide.

The blockade is the latest escalation in a conflict that has already closed the strait to most commercial traffic. Kpler data show just six commodity ships transited the waterway on Monday, down from a 10-day average of 11 vessels. China's COSCO Shipping Energy Transportation and China Merchants Energy Shipping have kept their tankers out of the strait and Bab al-Mandeb since late July, collecting cargoes instead near Fujairah and Omani ports.

Iran has said the strait will not reopen until the US fulfills the terms of the June memorandum of understanding — lifting the maritime blockade, releasing frozen assets, and ending oil sanctions. That 60-day agreement expired without a breakthrough, and President Donald Trump has since posted an image labeling the waterway "NEW U.S. Territory." Iran's parliament speaker, Mohammad Bagher Qalibaf, who leads Tehran's negotiating team, said the strait would remain closed until Washington meets those conditions.

Supply buffers blunt the worst-case premium

Oil prices have not sustained above $100 despite the disruption, because the shock is being absorbed across inventories, transshipment, and alternative routes. Saudi Aramco has resumed loading crude from within the strait, with three very large crude carriers each taking 2 million barrels at the Juaymah and Ras Tanura terminals between Aug 12 and 16. Ship-to-ship transfers off Fujairah and Omani ports are rerouting cargoes around the chokepoint, adding insurance and freight costs without cutting off supply entirely.

The last time the strait faced a comparable threat was in 2019, when tanker seizures and drone attacks pushed Brent above $70 within weeks. This time, the buffer has kept the front-month contract near $90, but the costs are migrating into freight rates, insurance premiums, and diesel crack spreads — the channels where Hormuz risk shows up before crude itself.

Inflation and dollar exposure mount

For the US dollar, sustained oil gains complicate the inflation picture. Iran's food inflation already reached 128 percent year-on-year in July, with annual inflation at 66 percent, according to Iran's Statistical Centre. If crude keeps climbing, US inflation expectations could firm, pushing the Federal Reserve toward a more cautious stance on rate cuts — a dynamic that would support the dollar even as risk-off flows pull investors toward gold.

Traders are watching USD/CAD and USD/NOK, currencies tied to energy exports that tend to strengthen with oil. The next price validation may come from freight rates and insurance costs rather than the front-month contract, as the market weighs how long inventories and rerouting can absorb the pressure before the strait's closure feeds through to physical supply.

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