Oil Falls as US-Iran Peace Talks Resume

Crude oil extended losses to trade below $85 a barrel on Monday after US Treasury Secretary Scott Bessent announced plans to isolate Iran through sanctions targeting entities and individuals doing business with the country. While the sanctions are broad, investors are focused on their potential impact on Iran’s oil exports and whether they could accelerate or delay a resolution to the US-Iran conflict. Bessent warned that at least one major financial institution could be sanctioned this week and suggested China would not be exempt. Iran has previously demonstrated its ability to circumvent sanctions and has warned countries against supporting Washington’s efforts. Meanwhile, oil continues to flow through the Strait of Hormuz, with shipments remaining relatively strong despite elevated geopolitical risks. Reports indicated that around 16 million barrels crossed the waterway in a single night last week, although flows can vary significantly.

Crude oil fell more than 2% to below $85 a barrel on Monday, ending a two-week rally as traders awaited details of the US plan to intensify economic pressure on Iran. Treasury Secretary Scott Bessent said the objective was to cut off Tehran’s economic lifelines, although the scope for further measures remains uncertain. Targeting China, the largest buyer of Iranian crude, could increase pressure on Tehran but also risk broader economic repercussions. Iran has previously demonstrated its ability to circumvent sanctions and has warned against countries supporting Washington’s efforts. Meanwhile, oil continues to move through the Strait of Hormuz, with shipments remaining relatively strong despite ongoing geopolitical risks. Reports suggested around 16 million barrels crossed the waterway in a single night last week, although flows can vary significantly.

Crude oil slipped to $85 per barrel after a sharp weekly rally, as investors took profits ahead of Washington’s announcement of what Treasury Secretary Scott Bessent called the “single greatest financial offensive ever” against Iran. The new measures are expected to expand sanctions on Iran’s banking, energy, aviation and cryptocurrency sectors while also targeting countries and entities that continue doing business with Tehran. The measures could further restrict Iranian oil flows, which have already been severely disrupted by the conflict and US blockade. Iran has pushed back, with its Persian Gulf Strait Authority warning that vessels violating its transit rules in the Strait of Hormuz could face fines, seizure or confiscation. Tehran has also threatened countries supporting the US campaign, raising concerns over further disruptions to the key oil route, through which roughly one-fifth of global seaborne oil passed before the war.