Oil headed for a substantial weekly gain as the US moved to isolate Iran's economy, raising concerns over further market disruption. West Texas Intermediate for October traded above $86 a barrel, on pace for a weekly gain of nearly 6%. Global benchmark Brent closed near $94 on Thursday after advancing for five consecutive sessions.

Treasury Secretary Scott Bessent said the administration would unveil details of the initiative next Monday, following President Donald Trump's characterization of the push as an "economic D-day." The measures will target Tehran and could impact countries dealing with the Islamic Republic, including China.

Oil has rallied more than 50% this year as the US-Iran conflict intensified in the Middle East, with both sides clashing near the Strait of Hormuz. Bessent claimed Washington controls the waterway, suggesting ships could exit via a southern lane. Beijing, the largest importer of Iranian oil, rejected the sanctions and called for diplomatic resolution.

The naval blockade of Iranian ports has severely restricted Tehran's crude exports, with Iranian Central Bank Governor Abdolnaser Hemmati stating flows have "virtually stopped." Meanwhile, Ukrainian attacks on Russian refineries and ports have disrupted Moscow's energy sector, contributing to global diesel market tightness.