US blockade of Iran can run indefinitely as Brent tops $90

The US military can sustain its naval blockade of Iran indefinitely, Defense Secretary Pete Hegseth said Thursday, keeping pressure on Tehran as Brent crude tops $90 a barrel.

"Indefinitely the United States Navy can maintain a blockade like that because we'll rotate ships in and out, as we have, and we'll continue to," Hegseth told reporters in Panama City, after addressing the crew of the guided-missile destroyer USS Gridley, which had previously deployed to the Middle East.

The Strait of Hormuz, through which a fifth of the world's oil and liquefied natural gas previously shipped, has been effectively shut by Tehran since the war began with US-Israeli strikes on Iran on Feb 28. Washington has poured tens of thousands of troops and more than 20 warships into the region, redirecting more than 55 commercial vessels attempting to run the blockade, disabling three and boarding two. Earlier this week, a US Navy MH-60 helicopter fired two Hellfire missiles into a Panama-flagged ship's engine room after it ignored warnings from US forces.

Brent crude has gained more than $10 a barrel in less than a week, briefly exceeding $90, as the two nations remain far apart on reopening the waterway. Trump on Wednesday declared the US has "total control" over the strait, calling the blockade "a wall of steel," while Iran's state media disputes the claim and Tehran continues to strike Washington's regional allies with missiles and drones.

Negotiations stall as demands escalate

Negotiations suffered a fresh setback Monday when Trump said he would demand conflict compensation from Iran as part of any peace deal, a direct counter to Tehran's insistence on receiving US reparations before any resolution. The escalating demands from both sides threaten to delay a quick settlement and have reignited inflation concerns, increasing the likelihood of higher interest rates.

The Federal Reserve faces a growing dilemma: labor market cooling supports a patient approach, but energy-driven inflation could erode that patience if it lifts headline consumer price index figures and household inflation expectations. The unexpected loss of more than 20,000 US jobs last month reduced expectations of a Fed rate increase, but surging price pressures could alter the central bank's position. US consumer price data due Wednesday will provide crucial guidance for the Fed's next decision, with markets now weighing the risk that sustained elevated oil prices force a more hawkish stance.

Months of US strikes have hit Iran's leadership and damaged large parts of its military capabilities, including its Navy, but have not broken Tehran's grip on the strait. Iran has been targeting commercial ships transiting without its permission, while the US military has said it will protect freedom of navigation for vessels traveling to and from non-Iranian ports.

Trump has oscillated between threats of escalation and claims a peace deal is imminent, while resisting the most escalatory steps such as deploying ground troops or bombing desalination plants. The last time oil spiked above $90 on a Hormuz disruption, after attacks on Saudi Aramco facilities in 2019, Brent retreated within weeks as spare capacity cushioned the shock — but this time the strait itself remains closed, and the blockade has no defined end date.

With midterm elections in November and high fuel prices a top issue in rural areas that backed him in the past, Trump faces mounting pressure to end a war that is deeply unpopular at home. If negotiations remain stalled, the indefinite blockade keeps the risk premium elevated across crude, defense contractors and safe-haven assets, with Wednesday's US inflation print the next event to watch.

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