Brent near $94 as US weighs oil export curbs, Iran sanctions

Brent crude held near $94 a barrel as US export restrictions collided with strategic petroleum reserve stockpiles approaching minimum levels, a supply squeeze that could deepen even as Washington weighs fresh sanctions on Iran.

"The biggest concern for markets is that oil reserves are nearing the minimum level, despite efforts to diversify away from reliance on the Strait of Hormuz," Andy Lipow, president of Lipow Oil Associates, said.

Brent crude futures rose 20 cents, or 0.21 percent, to $93.98 a barrel, while West Texas Intermediate gained 7 cents, or 0.08 percent, to $86.90. Both benchmarks are on track for a second straight weekly gain, with Brent up more than 6.1 percent and WTI up 5.3 percent this week, touching their highest since July 24.

The Strait of Hormuz carries nearly a fifth of global crude and liquefied natural gas shipments, and traffic through the waterway has slowed to six commodity vessels a day from nine as shipowners avoid the route. If Washington curbs US exports while sanctions squeeze Iranian barrels, the combined loss of supply could push prices higher and feed inflation expectations across energy-dependent economies.

The prospect of export curbs would reverse nearly a decade of free trade in US crude. Washington lifted its 40-year ban on crude exports in December 2015, turning the country into one of the world's largest shippers. Reimposing restrictions now, with the SPR at its lowest in decades, would remove a key buffer that has helped stabilize global markets during Middle East disruptions. The reserve has not been refilled to pre-2022 levels since the administration released a record 180 million barrels to tame prices after Russia's invasion of Ukraine.

Iran's tightening of transit rules through the Strait of Hormuz has added to the risk premium. The Persian Gulf Strait Authority warned that vessels violating its arrangements could face fines, detention, or confiscation, heightening risks for charterers and shipowners. Traffic through the waterway has slowed to six commodity vessels a day from nine, with most owners avoiding the route because of a lack of clarity on its reopening. A tanker was also struck by an unknown projectile off Saudi Arabia's Red Sea port of Yanbu, where millions of barrels a day are loaded, showing the breadth of the disruption. The United Arab Emirates said it detected two ballistic missiles launched from Iran that targeted maritime traffic, though Tehran dismissed the report as baseless.

Urals Flips to Premium as Supply Tightens

The squeeze is already visible in regional pricing. Russian Urals crude delivered to India flipped to a premium against the dated Brent benchmark for the first time since May, with October cargoes offered at premiums up to $1 a barrel compared with discounts of $1 to $2 for September arrivals. The rebound reflects stronger Asian demand colliding with tighter export availability, a dynamic that could intensify if US barrels are pulled from the market.

Higher crude feeds directly into inflation expectations, complicating the Federal Reserve's path. A sustained move above $95 in Brent would pressure energy costs across transport, manufacturing, and utilities, while a stronger dollar on rate expectations would weigh on emerging-market importers. The United States has threatened to impose the toughest sanctions in history on Iran, and Treasury Secretary Scott Bessent has pressed Beijing to back the campaign, warning that nations joining the "economic war" would be deemed enemies. If Washington combines those sanctions with export curbs, the market could face a supply gap that no amount of diversification away from Hormuz can quickly fill. Traders will watch the next EIA inventory report and any formal announcement from the White House for signs of how quickly the policy could take effect.

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