Brent nears $94 as Iran sanctions and Hormuz squeeze push crude higher
Crude is climbing, and US fuel buyers could feel it at the rack within days. Brent traded near $94 on Thursday, on track for a weekly gain of about 6%, and West Texas Intermediate was near $87 after five straight sessions of gains. October WTI settled around $86.31, up $4.82 for the week. With the barrel up about five percent over five days, jobbers buying next week are likely buying into a higher market than they saw last Friday.
The move is being driven by US policy, not a supply disruption at the wellhead. Treasury Secretary Scott Bessent said the administration will detail a new campaign to isolate Iran's economy on Monday, an effort President Trump called an "economic D-day." Traders are pricing in the risk premium ahead of the details. The measures could hit Tehran and also countries that keep dealing with Iran, China included.
The Iran squeeze
The reinstated US blockade on Iranian exports is doing real work. China's independent refiners, the teapots, imported an estimated 534,000 barrels a day of Iranian crude in August, down from 823,000 in July, per Kpler data cited by Reuters. Available Iranian cargoes outside the Persian Gulf and Gulf of Oman have fallen to about 83 million barrels from more than 100 million before mid-July. Those teapots may have to find alternative supply as soon as next month, and that hunt pulls barrels from the same pool US refiners buy from.
Hormuz is the other pressure point. Transits through the strait have been in single digits all week. Saudi Arabia is shuttling crude north on Sinokor tankers to dodge Houthi attacks, keeping flows moving but adding cost, and the UAE is doing the same to get barrels out of the Gulf. Higher freight and longer routes end up in the landed price.
The RFS extension
EPA extended the renewable fuel standard compliance deadline for refiners, per Reuters. It buys obligated parties more time to acquire or true up their RIN obligations, which eases near-term pressure on merchant refiners already watching crude eat into margins. It does not change the annual volumes, so the underlying blending math stands.
Ethanol builds
Ethanol production fell last week while inventories kept building, per RFD-TV. Softer output with rising stocks points to slack demand at the blend pump and could keep ethanol values soft even as crude firms, which widens the discount blenders capture at the rack.
What to watch
Monday's Iran announcement is the fulcrum. If the measures land hard and Hormuz stays thin, crude could hold in the mid-$90s and rack prices stay firm. If details underwhelm or the strait reopens, some of this week's premium could come back out.