Trump says Iran's IRGC lost 91% of weapons as oil tops $85

President Donald Trump said the U.S. campaign against Iran's military infrastructure has degraded the Islamic Revolutionary Guard Corps' missile, drone and coastal defense systems by about 91%, as Brent crude extended its weekly rally above $85 on mounting supply risks through the Strait of Hormuz.

"The oil market has proven extremely patient through this crisis, in large part thanks to an ample stock cushion upon which we were able to draw," said Rory Johnston, founder of oil market research firm Commodity Context. "Unfortunately, much of that cushion has now been depleted."

Brent crude rose more than 13% this week to trade above $85 a barrel, the highest since June 15, after five consecutive days of U.S. airstrikes on Iranian targets. West Texas Intermediate crude followed, climbing above $74. The escalation marks a collapse of the interim U.S.-Iranian peace agreement signed last month, which had briefly reopened the Strait of Hormuz — a corridor handling about one-fifth of global daily oil and liquefied natural gas supplies. Vessel traffic through the strait fell to 57 transits from Friday through Sunday, a more than 50% decline from the prior week, according to MarineTraffic data. Before the conflict began in late February, roughly 130 vessels transited the waterway daily.

The unraveling of the truce threatens to reverse the supply recovery that followed last month's agreement. Global oil supply rose by 4.1 million barrels a day in June after the deal, the International Energy Agency said, but remained 9.4 million barrels a day below pre-war levels. With strategic stockpiles depleted after months of emergency drawdowns, the market faces a more acute physical shortage risk than at any point since the conflict began.

The U.S. military has conducted strikes on Iranian air defense systems, coastal radar installations, missile and drone sites, and naval vessels across five consecutive days, U.S. Central Command said. The operations focused on Greater Tunb Island near the Strait of Hormuz and other strategic positions Tehran used to threaten commercial shipping.

Iran's Islamic Revolutionary Guard Corps responded by attacking two oil supertankers in the strait and launching missile and drone strikes against U.S. military assets in Kuwait and Bahrain, according to Iranian state media. The IRGC said the waterway would remain closed until the United States ends its military campaign and blockade of Iranian ports.

"The region's oil and gas exports are either available to all or available to none," the IRGC said, according to Iran's Press TV.

Traffic Grinds to a Halt

The International Maritime Organization said conditions in the Strait of Hormuz remain too dangerous for normal commercial navigation. The U.S. Department of Energy said 8.5 million barrels of oil transited the strait on Monday with U.S. military assistance, describing the flow as consistent with the recent average. But ship-tracking data from Kpler showed only six vessels transiting on Sunday, a five-week low.

Trump said the Strait of Hormuz remained open to commercial traffic despite Iran's closure declaration, and that Washington would reimpose its blockade of Iranian ports while charging vessels transit fees as the "guardian" of the waterway. The president also said Tehran had expressed interest in renewed negotiations, though Iranian officials have not publicly confirmed that claim.

Supply Bypass Offers Limited Near-Term Relief

Goldman Sachs estimated that expanding pipeline capacity in the Middle East could shield more than 60% of pre-war Gulf oil exports from any future Hormuz disruptions by the end of 2028. The bank's base-case forecast assumes bypass capacity will rise by 3.8 million barrels a day by end-2027 and 7.3 million barrels a day cumulatively by end-2028, taking total effective bypass capacity to more than 14 million barrels a day.

But those projects remain years from completion. In the near term, the market is pricing in a sustained disruption premium. "A move to $100 is quite possible, should it become apparent that physical shortage risks are real and increasingly likely," said Bart Melek, global head of commodity strategy at TD Securities.

The Abu Dhabi National Oil Company set the August official selling price of its benchmark Murban crude at $80.01 a barrel, down from $101.48 a barrel the month before — a sign that the brief peace deal had begun to ease physical market tightness before the renewed escalation.

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