Oil prices eased Friday but remained on track for a second straight weekly gain after U.S. Treasury Secretary Scott Bessent said Washington will impose its toughest-ever sanctions on Iran. Brent crude closed above $93 a barrel Thursday for the first time since July 24, while diesel cracks hit record highs as the Strait of Hormuz standoff drags on.
Brent crude futures were 0.8% lower at 4:50 ET on Friday, and U.S. West Texas Intermediate futures for October delivery slipped 0.89%. Both benchmarks still headed for a second consecutive weekly rise, even as hopes of a swift reopening of the Strait of Hormuz kept fading.
Sanctions threat overshadows diplomacy
Bessent told CNBC that a return to large-scale military combat was unlikely even as the U.S. steps up economic pressure, echoing President Donald Trump's threat of a crushing economic operation against Tehran. But he said he did not know why crude prices had gained after the president's comments, since maximum economic pressure made a return to large-scale attacks improbable.
Rystad Energy's Janiv Shah told CNBC that with the conflict showing few signs of diplomatic progress, the market is once again "pricing in the failure of diplomacy." Brent is on course for a monthly gain of nearly 6%, following last week's 5.95% rise.
Refined products bear the bigger strain
Shah said the heavier pressure is showing up in refined product prices, not crude itself, with diesel cracks hitting record highs amid fears of prompt supply shortages and thin inventory buffers. Vessel traffic through the Strait of Hormuz has stayed at a crawl amid fatal attacks, leaving the shipping outlook deeply uncertain.
Vance frames sanctions as leverage
Vice President JD Vance called economic pressure Washington's most effective tool against Iran, describing the standoff as a delicate dance in which both sides press the other. He said Iran has felt more strain than the U.S. over the past couple of weeks.
Vance said pump prices for Americans remain elevated but have come down substantially because the U.S. has gotten a lot of oil and gas moving out of the Strait with military assistance. Still, ship traffic through Hormuz has stayed thin, with 10 crossings on Monday and two transits on Sunday, against roughly 130 ships a day before the war.
Iran's parliament speaker, Mohammad Baqer Qalibaf, told an event in Baghdad that Muslim countries must find a way to overcome the sanctions, according to a government summary of his remarks.
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