Oil Prices Slide as US Expands Sanctions on Iran

Crude oil traded near $85 per barrel on Tuesday after falling more than 2% in the previous session, as the US intensified economic pressure on Iran and its trading partners in an effort to force the reopening of the Strait of Hormuz. Treasury Secretary Scott Bessent announced plans to isolate Iran through sanctions targeting countries that continue doing business with the Islamic Republic, while President Donald Trump said those nations would be given a specific timeline to sever ties with Tehran or face unilateral US penalties. However, markets remain uncertain over whether the US measures will help accelerate or instead delay a potential resolution to the US-Iran conflict and the full reopening of Hormuz. Meanwhile, risks to energy flows in the Middle East remain elevated, with the UK Navy reporting that an oil tanker was struck and disabled near Oman, while Iran-backed Houthi militants said they had fired on a Saudi Arabian supertanker sailing through the Red Sea.

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.